Akash Ramdas Nikam, Symbiosis Law School
ABSTRACT
From juristic point of view, a company is a legal person distinct from its members (Salomon v Salomon, 1897 A.C 22). The effect of this principle is that there is fictional veil between the company and its shareholders. This principle is often referred as “Veil of incorporation”. However in number of cases, the court will pierce the corporate veil or will ignore the veil in order to reach the real actors behind the shield or to reveal the true nature of the company. The paper discusses myriad of instances when lifting of the iron curtain becomes necessary to see the backstage of a company only to appreciate the purpose of its incarnation better in the first place. The doctrine of lifting of corporate veil is an exception to the doctrine of separate legal personality as enunciated in the Salomon v. Salomon case.
This paper attempts at explaining how this doctrine has evolved, challenged, and yet has helped in enriching the jurisprudence. It further provides an examination of the instances underlining the principles adopted by common law, case law and statutes to pierce the veil of incorporation where the company is a façade, a sham, an alter ego, or a puppet for crime. Further, this paper analyzes jurisprudential aspect regarding lifting of corporate veil in U.K, U.S.A and Singapore and concomitant issues followed by the conclusion.
Keywords: Corporate veil, separate legal personality, abuse, veil of incorporation.
