Lifting The Veil Of Incorporation In Company Law Uk

The essay analyses and scrutinises under which circumstances the corporate veil can be disregarded in the uk.

Lifting the veil of incorporation in company law uk. Cases and articles have been used to set out the main principles in which the law is based. After a progression of endeavors by the court of appeal during the late 1960s and mid 1970s to set up a straight jacketed formula for lifting the veil the house of lords reasserted a universal methodology. Lifting the veil occurs where the courts or law disregard the corporate personality of the company in deserving circumstances. However courts will not lift the veil if the company is set up to avoid future liabilities.

The expressions lift the corporate veil lift the curtain of incorporation and pierce the veil of incorporation describes the. Consequently a company s liabilities are its own not those of its shareholders. The incorporation of a company creates a separate person in law. Although the company has privilege as separate legal entity it must not be used for any unlawful or illegal business purposes in case a fraudulent or dishonest use is made of the legal entity the concerned individuals will not be allowed to take the shelter of the corporate personality.

And hence the concept of the corporate veil separating those parties from the body has arisen. The issue of corporatelifting the. Introduction when carrying on business seeking an appropriate corporate structure which accommodates to the needs of the intended business and lifting the corporate veil uk law. 20 of companies act 2013 a company is a company which has been incorporated under this act or previous company law.

Courts have shown immense willingness to lift the veil where device of incorporation is used for some illegal or improper. Some commentators also argue that these cases do not involve lifting the corporate veil at all. In turn a protective veil of sorts is cast over the true controllers of the company. Mayson french and ryan state that even if the agency used to commit the fraud or evade the obligation had been another person rather than a company the result would have been the same 16.

Where the company is a sham the courts also lift the veil where a company is a mere cloak or sham hoax. Lifting the veil of incorporation. Lifting the veil of incorporation. In adeyemi v lan and baker nig ltd the court held that there is nothing sacrosanct about the veil of incorporation.

In layman s terms a company is an. Company law lifting of corporate veil 1 introduction when a company is incorporated it is treated as a separate legal entity distinct from its promoters directors members and employees. Legal effect of getting past the shelter given to the shareholders and directors of companies. Janardan mohandas rajan pillai.

Means by which a court will disregard the separate personality of the company. Abuse of the separate legal personality separate legal personality.