Commercial law: lifting the veil of incorporation essay limited liability company is undoubtedly one of the most outstanding inventions of mankind. The veil of incorporation is said to be lifted there are two existing theories for the lifting of the corporate veil the first is the alter-ego or other self theory, and the other is the instrumentality theory.
Assignment question the veil of incorporation serves to encourage rather than restrict director innovation in managing a company likewise, the po. The court cannot lift the veil only because, in its opinion, it meets the interests of justice, but the corporate veil should be lifted if the case also involves impropriety, abuse of rights, deception or offense (anderson, 2012, p 133.
The veil of incorporation ensures that a company is a separate legal entity from its directors and shareholders perpetual existence corporatized government enterprise a company forms a new legal entity separate from the shareholders. The corporate veil in the united kingdom is a metaphorical reference used in uk company law for the concept that the rights and duties of a corporation are, as a general principle, the responsibility of that company alone just as a natural person cannot be held legally accountable for the conduct or obligations of another person, unless they. Veil of incorporation under the companies act 2006, the effect of registering a company gives it its own legal personality which becomes distinct from its members and creators.
To offer a full account of the exceptions to the corporate personality doctrine, this paper also examines cases where the veil of incorporation is lifted due to a breach of a statutory provision design/methodology/approach - the paper reviews recent case law and statutory provisions relating to lifting the corporate veil. Definition of corporate veil: a legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and other. Veil of incorporation under the companies act 2006, the effect of registering a company gives it its own legal personality which becomes distinct from its members and creators extracts from this document.
The veil of incorporation limits the personal liability of corporate directors, officers and employees for actions taken by the business however, business owners can still be liable for business activities if they failed to follow corporate guidelines, commingled assets or acted recklessly.
In particular, it makes sense to consider the doctrine of lifting the corporate veil in the overall context of the fight against abuse of corporate relations, as well as a kind of addition to the norms of the written law, stipulating that under certain circumstances company participants can be deprived of their privilege of limited liability. Piercing the corporate veil typically is most effective with smaller privately held business entities (close corporations) in which the corporation has a small number of shareholders, limited assets, and recognition of separateness of the corporation from its shareholders would promote fraud or an inequitable result. Incorporation, lifting the veil and thereafter the wok will examine the theories of incorporation before delving into the substance of this article which this the legal reasons for piecing the veil of incorporation of a business.