Business Law – The Corporate Veil

It is seen that a company, as a person, has a legal identity of its own. An obvious consequence is that the company in question may become liable for the actions of the company.

● Usually, the owners of the company are free from any liability.
● It is assumed that the owners of the company are protected from liabilities by the company under a ‘veil of incorporation’.
● However, there are certain circumstances when the court of law removes the veil so that the members of the corporation are not protected anymore by the veil.
● However, there is no specific list of circumstances when the court of law is supposed to remove the veil.
● However, the veil has been removed in the past under the following circumstances −
ü Where the formation of the company was intended for a fraudulent purpose.
ü Where the company was considered as an enemy at the time of war.
ü Where several groups of companies were regarded as one.
ü Where a company was treated as a partnership with an intent to wind up.