Lifting The Veil Of Incorporation In Company Law

This curtain or veil when is overlooked to understand the true nature and real beneficiaries of company is called lifting of corporate veil.

Lifting the veil of incorporation in company law. Some commentators also argue that these cases do not involve lifting the corporate veil at all. In adeyemi v lan and baker nig ltd the court held that there is nothing sacrosanct about the veil of incorporation. Lifting the veil occurs where the courts or law disregard the corporate personality of the company in deserving circumstances. 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.

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. Consequently a company s liabilities are its own not those of its shareholders. However courts will not lift the veil if the company is set up to avoid future liabilities. Courts have shown immense willingness to lift the veil where device of incorporation is used for some illegal.

Company law business organisations preview text reasons for lifting the veil of incorporation circumstances when the veil is lifted are haphazard and difficult to categorize. The incorporation of a company creates a separate person in law. Where the company is a sham the courts also lift the veil where a company is a mere cloak or sham hoax. Company avoiding legal obligations where the use of an incorporated company is being made to avoid legal obligations the court may disregard the legal personality of the company and proceed on the assumption as if no company existed.

The veil shall be lifted to prevent the avoidance of recognition by the eyes of equity. Lifting of corporate veil of company under company law. Lifting the veil of incorporation. Abuse of the separate legal personality separate legal personality.

Subsequently in 1897 in solomon v solomon company the house of lords effected these enactments and cemented into english law the twin concepts of corporate entity and limited liability. The corporate veil in uk company law is pierced every once in a while. Where the company is a sham the courts also lift the veil where a company is a mere cloak or sham hoax. Ruchika jha march 3 2020.

Company avoiding legal obligations where the use of an incorporated company is being made to avoid legal obligations the court may disregard the legal personality of the company and proceed on the assumption as if no company existed.