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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. Usually a corporation is treated as a separate legal person , which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed.
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 ...
De facto corporation and corporation by estoppel are both terms that are used by courts in most common law jurisdictions to describe circumstances in which a business organization that has failed to become a de jure corporation (a corporation by law) will nonetheless be treated as a corporation, thereby shielding shareholders from liability.
Thus, there is not one characteristic that defines the piercing of a corporate veil – a factors test is used to determine if piercing is appropriate or not. [ 13 ] If shares are issued "part-paid," then the shareholders are liable, when a claim is made against the capital of the company, to pay to the company the balance of the face or par ...
This is referred to as piercing the corporate veil, and is subject to the rules of the home state where the corporation is a domestic corporation. In the case of corporations domesticated in Nevada, for example, as of 2007 [update] , over the last twenty years, only twice has the corporate veil been pierced, and in both cases the corporation's ...
that limited liability might yield results that seem "unfair" to jurors unfamiliar with the function of the corporate form cannot provide a basis for piercing the veil. Because there was no evidence that Aaron was attempting to defraud anybody, the veil could not be lifted.
Corporate veil piercing removes the possibility of a large developer allowing a defunct entity to absorb a judgment without payment. Aegis No More: Disarming Residential Developers Through ...
The idea of enterprise liability was supported by the Court of Appeal in DHN Food Distributors Ltd v Tower Hamlets London Borough Council, a case on piercing the corporate veil. [5] More generally in the law of tort, the principle has been argued to have been recognised, albeit indirectly, by cases such as Lister v Hesley Hall Ltd. [6]