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Lecture 11 Lifting of the Corporate Veil

Lecture 11 Lifting of the Corporate Veil

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Published by Nick William

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Published by: Nick William on Jun 23, 2011
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06/16/2013

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COMPANY LAWCOMPANY LAW
LIFTING OF THE CORPORATELIFTING OF THE CORPORATEVEILVEIL
LECTURE 11LECTURE 11
 
Charles NicholsonCharles Nicholson
 
2
LIFTING OF THE CORPORATE VEILLIFTING OF THE CORPORATE VEIL
The principle of separate corporate personality as confirmedThe principle of separate corporate personality as confirmedinin
 Saloman v. A Saloman & Co. Ltd  Saloman v. A Saloman & Co. Ltd 
..
[1897] forms the[1897] forms thecorner-stone of co. law.corner-stone of co. law.
Incorporation of a co. casts a veil over the true controllers of Incorporation of a co. casts a veil over the true controllers of the co, a veil through which the law will not usuallythe co, a veil through which the law will not usually penetrate. penetrate.
There are however instances when the law will disregard or There are however instances when the law will disregard or look behind the corporate personality and have regard to thelook behind the corporate personality and have regard to thereality of the situation. Lifting or piercing the corporate veilreality of the situation. Lifting or piercing the corporate veilmean in effect ignoring the fact that the business is carriedmean in effect ignoring the fact that the business is carriedon by a co. and looking behind the co. to see who is actuallyon by a co. and looking behind the co. to see who is actuallyoperating it.operating it.
 
3
This would involve treating the rights or liabilities or This would involve treating the rights or liabilities or activities of the co. as the rights or liabilities or activitiesactivities of the co. as the rights or liabilities or activitiesof its shareholders, for example treating the business of aof its shareholders, for example treating the business of aco. as that of its principal shareholder.co. as that of its principal shareholder.
Lifting the corporate veil is sometimes expresslyLifting the corporate veil is sometimes expresslyauthorised byauthorised by
statutestatute
((statutory exceptionsstatutory
 
exceptions) and) andsometimes it is adopted by thesometimes it is adopted by the
courtscourts
(( judicial
 
 judicialexceptionsexcep
 
tions).).
Each case has to be approached based on its own peculiar Each case has to be approached based on its own peculiar facts rather than purely on legal rules. We need to look atfacts rather than purely on legal rules. We need to look atthe cases as examples of situations as to when the courtsthe cases as examples of situations as to when the courtshave lifted the corporate veil.have lifted the corporate veil.

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