In the Doctrine of ‘Lifting the Corporate Veil’, the law goes behind the mask or veil of incorporation to determine the real person or group of people behind the company. The Courts and Jurists have regarded the concept of ‘lifting the corporate veil’.
What is corporate veil and its lifting?
Lifting or piercing of corporate veil means ignoring the fact that a company is a separate legal entity and has a separate identity (Corporate personality). The appropriate authority will break this shell of the company and sue the individuals who have done or committed such a crime or offence.
What are the grounds of lifting of corporate veil?
1) Fraud or Improper Conduct– The most common ground when the courts lift the corporate veil is when the members of the company are indulged in fraudulent acts. The intention behind it is to find the real interests of the members.
WHO lifts the veil in the process of lifting of corporate veil?
Where the conduct of the company is in conflict with public interest or public policies, Courts are empowered to lift the veil and personally hold such persons liable who are guilty of the act. To protect public policy is a just ground for lifting the corporate personality. One such scenario is Jyoti Limited vs.
When can the court lift the corporate veil?
Avoiding a legal obligation The Court may lift the veil if the company concerned is ‘using’ the veil to avoid fulfilling legal obligations. For example, if a company owes a creditor money but transfers their assets to another entity to avoid payment, the Court can lift the veil.
Can arbitrator lift the corporate veil?
The Court held that an arbitral tribunal’s jurisdiction rests on the agreement between the parties and cannot proceed against non-signatories to the arbitration agreement. Thus, it was laid down in unequivocal terms that only a court can lift the corporate veil and the same cannot be done in an arbitration.
Which is not case of lifting of corporate veil?
The liquidator personal liability is limited to the amount notified by the Income Tax officer under section 178 (2) if so notified. This is strictly not a case of lifting the corporate veil but one where for non- compliance with certain provisions in the I.T.
Why is corporate veil important?
The corporate veil is a legal concept which separates the actions of an organization to the actions of the shareholder. Moreover, it protects the shareholders from being liable for the company’s actions. The liability protection of a corporation is quite important, unfortunately, it is not always absolute.
What is foreign award in arbitration?
According to the section, For the purposes of Chapter I, “foreign award” means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960—
What are the two circumstances of lifting up a corporate veil?
The corporate veil may be lifted where the statute itself contemplates lifting the veil or fraud or improper conduct is intended to be prevented. The circumstances under which corporate veil may be lifted can be categorized broadly into two following heads: Statutory Provisions. Judicial interpretation.
Is there a lifting of the corporate veil?
The corporate veil says that members of company are shielded from Liability Connected to the company’s actions. But if the Company is created just to reduce tax liability of a person then there will be lifting of Corporate veil.
Which is an example of piercing the corporate veil?
Imagine a company that is used to evade tax. In such cases, piercing the corporate veil allows the Court to understand the real owner of the income of the company and make the said person liable for legitimate taxes. Sometimes the members of a company can create another company/subsidiary company to avoid certain legal obligations.
When was the lifting of the veil first propounded?
The Doctrine of the lifting of the corporate veil was first propounded in the year 1897 within the distinguished English case of Salomon v A Salomon & Co Ltd. [1]
How are case laws related to corporate veil theory?
Any concept can be understood in a better way with the help of citations. This Article is a compilation of case laws of the title subject for CA foundation students to help in their study of law subject. The term corporate veil refers to the concept that members of a company are shielded from liability connected to the company’s action.
