Lifting The Veil Of Incorporation Under Case Law

The case has been decided in the light of concept of lifting up of corporate veil.

Lifting the veil of incorporation under case law. Lifting the veil occurs where the courts or law disregard the corporate personality of the company in deserving circumstances. The judgment of the court of appeal in the adams case can be said to be the current law which is nothing more than a reiteration of the law laid down by the house of lords in solomon s case. Union of india xiv it was alleged that the company had violated section 11 a of the central excises and salt act 1944. The act provides for certain cases in which the directors or members of the company may be held personally.

This article at first introduces to the readers the concept of veil of incorporation then it explains the meaning of the term lifting of the corporate veil it then points out the judicial as well as the statutory provisions for lifting of the corporate veil with the help of various case laws. The bottom line being only the court will lift the veil in the face of grave abuse of the corporate form and not otherwise. Critically evaluate with reference to relevant case law and statute how far this statement accurately reflects the current law relating to lifting the veil of incorporation. The veil shall be lifted to prevent the avoidance of recognition by the eyes of equity.

In case of economic offences a court is entitled to lift the veil of corporate entity and pay regard to the economic realities behind the legal facade. The incorporation of a company creates a separate person in law. The conditions under which the courts may pierce through the corporate veil can be classified under the following two heads. The view communicated at first case by hhj southwell qc in creasey v breachwood that english law unquestionably perceived the rule that the corporate veil could be lifted was depicted as a sin by hobhouse lj in ord v bellhaven and these questions were shared by moritt v c in trustor v smallbone the corporate veil cannot be lifted only because equity requires it.

Circumstances in which courts may lift the corporate veil. Abuse of the separate legal personality separate legal personality. Company law lifting of corporate veil with reference to leading case shagun singh 15 04 2013 national university of research and study in law 2013 introduction corporate personality has been described as the most pervading of the fundamental principles of company law 1. In adeyemi v lan and baker nig ltd the court held that there is nothing sacrosanct about the veil of incorporation.

It constitutes the bedrock principle upon which company is regarded as an entity distinct from. Introduction salomon v salomon 1 involved the principle of separate corporate personality. Provision of law the concept of lifting of corporate veil says that a company will be regarded as having enemy character if the persons having de facto control of the company are resident of enemy country or whenever they are acting on instruction of enemy. In turn a protective veil of sorts is cast over the true controllers of the company.

Lifting the veil of incorporation.