Explain the meaning of the `veil of incorporation`. In what circumsatnces is a court likely to `lift the veil`? Is it useful to suggest that the Courts will lift the veil to prevent an injustice?
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Under the certain situation , the regular courts will no longer upheld the existence of corporate veil , and instead , the courts will enforce its judicial powers to ignore the corporate personality and to “lift or pierce the corporate veil ” and thereby attaching the liabilities to the corporation ‘s directors or shareholders as parties legally responsible for the corporation ‘s dealings Lifting or piercing the corporate veil is a legal procedure whereby the court determines whether the usual immunity of corporate officers or entities from liability may be overlooked for the commission of unlawful and illegitimate corporate acts such as exercising their powers beyond those which are provided in their articles of incorporation and defrauding their business creditors
It is in this manner that individuals are encouraged and secured to commit a sum of their money as a capital to a corporation with the guarantee that they will not incur any personal legal accountability for the corporation ‘s liability However , this corporate veil , under certain circumstances , has been lifted by the courts in as much as the said corporate structure has been utilized reprehensively and illegally such that the continued existence of the corporation is going against public policy
It is the existence of the corporate personality combined with its limited liability that gave rise to the concept of corporate veil
More often than not , the court pierces the veil of corporation which are usually established as an mere adjunct , agent , alias , alter ego , alter , idem , arm , blind branch , buffer , cloak , coat , corporate double , cover , creature , curious reminiscence , delusion , department , dry shell , dummy , fiction , form formality , fraud on the law
Consequently , the owners of the corporation , whether it is a person or another company , under ordinary circumstances and situations , are not answerable for the corporation ‘s obligations
Veil of IncorporationIt has been a settled principle that a corporation has a distinct and separate entity from that of its shareholders
Is it useful to suggest that the Courts will lift the veil to prevent an injustice
In what circumsatnces is a court likely to `lift the veil`
It is a juristic entity a corporate personality , which is created by law and is recognized as an artificial being possessing with certain powers and rights , which are carried out through the acts of its directors
One must remember that the legal personality of the members and the company are separateVN:F [1.9.14_1148]