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How is the corporate veil lifted?

Asked by: Briana Casabella

asked in category: General Last Updated: 9th January, 2020

How is the corporate veil lifted?

This is known as ‘lifting of corporate veil‘. It refers to the situation where a shareholder is held liable for its corporation’s debts despite the rule of limited liability and/of separate personality. The veil doctrine is invoked when shareholders blur the distinction between the corporation and the shareholders.

Simply so, what is lifting of corporate veil in company law?

Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. For example, English law conferred entity status on corporations long before shareholders were afforded limited liability.

One may also ask, how easy is it to pierce the corporate veil? If a court pierces a company’s corporate veil, the owners, shareholders, or members of a corporation or LLC can be held personally liable for corporate debts. This means creditors can go after the owners’ home, bank account, investments, and other assets to satisfy the corporate debt.

One may also ask, what is the concept of corporate veil?

The corporate veil definition is a legal concept that separates the actions of an organization to the actions of the shareholder. In addition, it protects them from being liable for the company’s actions. A court can also determine whether they hold shareholders responsible for a company’s actions or not.

What is lifting of corporate veil in India?

Lifting of Corporate Veil: Indian Scenario. The doctrine of lifting the corporate veil means ignoring the corporate nature of the body of individuals incorporated as a company. Being an artificial person, it (company) cannot act on its own, it can act only by natural persons.

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