Lifting The Veil Of Incorporation Under The Insolvent Trading Regime Is Targeted At Protecting

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Lifting the veil of incorporation under the insolvent trading regime is targeted at protecting. However bainbridge makes the case for direct liability for shareholders at fault even where the shareholder is an individual. An insolvency support services iss survey of 70 insolvency practitioners websites has revealed that only 25 contain any information about the rights of the various parties an insolvency practitioner will routinely process data about during the course of an insolvency engagement. Debtors directors creditors employees and other stakeholders. Favourable restructuring or insolvency regime.

Lifting of the corporate veil means a situation in which. Gelb above n 2 18. The position of the courts when it comes lifting the veil or piercing the veil is unclear. The main ones are under special insolvency act provisions for fraudulent trading or wrongful trading.

In comparison causing a company s insolvency under german law existenzvernichtung footnote 128 which is commonly described as a case of veil piercing durchgriffshaftung footnote 129 applies to the specific case of shareholders entering into a transaction or otherwise transferring assets out of the reach of the creditors in order to benefit certain parties to the detriment of the. Essentially if you carry on trading and incurring liabilities when you know or have reason to believe the company can t meet it s liabilities the creditor an go after your personal assets to repay the debt. However the two exceptions to this under singapore law at present are. Some clarification was attempted by staughton lj in atlas maritime co sa v avalon maritime ltd that to pierce the corporate veil is an expression that i would reserve for treating the rights or liabilities or activities of a company as the rights or activities of its shareholders.

The court will lift the veil where the device of incorporation is used for some illegal or improper purpose. These are contained in corporations act pt 2d 1 div 1 and elsewhere including the duty to prevent insolvent trading under s 588g. The courts have intervened on numerous occasions and lifted the veil inorder to circumvent a fraudulent or improper design by a bunch of scheming promoters or shareholders. It is one of the most widely used doctrines to decide when a shareholder or shareholders will be held liable for obligations of the corporation and continues to be the most litigated and most discussed doctrines in all of.

In the doctrine of lifting the corporate veil the law goes behind the mask or veil of incorporation in order to determine the real person behind the mask of a company. And ii alter ego viz that the company is merely the conduit for or carrying on the business of its controller alwie handoyo v tjiong very sumito 2013 4 slr 308 ca alwie at 96.