What does lift the veil expression mean? This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Lifting the veil occurs where the courts or law disregard the corporate personality of the company in deserving circumstances. Module. The concept of lifting of corporate veil says that a company will be regarded as having enemy character if the persons having de facto control of the company are resident of enemy country or whenever they are acting on instruction of enemy, therefore there should be a lifting of corporate veil. Principle of Lifting the Corporate Veil There is often talk about how a company is a person in eyes of law. ‘Lifting of corporate veil’ or disregarding of the corporate personality is common buzz in the modern corporate arena. All notes in regards to Salomon v Salomon and lifting the corporate veil. Also, be aware of the following exceptions: The most common form of piercing the veil you’ll come across involve close corporations. Once a business is incorporated according to the provisions laid out in the Companies Act of 2013, it becomes a separate legal entity. A good lifting the veil meaning is a company that loses its liability protections, and this could apply to corporations or LLCS. However, there are cases where the courts may get around such protection if a business owner commits some type of malfeasance. The law on when a Court may disregard this principle by lifting the corporate veil and regarding the company as a mere agent or puppet of its controlling shareholder or parent corporation follows no consistent principle. Directors who may be members are not protected by the veil in some statutory cases: All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. Instances where this has been done are: (1) where a group of companies is an economic entity; and (2) where there is illegality. The type of entity you choose depends on your business goals, but keep in mind that an LLC offers more flexibility than corporations in terms of management, paperwork filing, and state guidelines. Geoffrey Morse et al, Palmer’s Company Law (Vol. In these cases courts ‘lift the corporate veil’ to make members liable for the actions of the company. The principle of the separate legal personality, however, is not immune from abuse. https://legal-dictionary.thefreedictionary.com/lifting+the+veil, Supposing that by these words Anna Pavlovna was somewhat. Cardiff University. However, the courts can remove your limited protection for both entities in certain cases. Even if the corporate veil is pierced, keep in mind that you would only be held liable for your share within the company. Lifting of Corporate Veil under Judicial Interpretation. Was this document helpful? Therefore, the Salomon principle remains an important part of corporate law today. 7. However, members or shareholders of a business may still not be held accountable for the acts of a business, even if that person holds the entire portion of a company’s capital. What does lift the veil expression mean? Also the connection between the judicial pronouncements of two separate cases regarding lifting of veil of a corporate entity cannot be ascertained as every court’s view on lifting of corporate veil depends on the facts of each case. The laws vary by state, but you should know that the courts tend to only remove protections in serious criminal offenses. In Florida, one must typically show two things in order to pierce the corporate veil: 1. That the alleged parent company or shareholder(s) also engaged in improper conduct In those circumstances, the corporate veil cannot give any protection to the directors. Limited liability protections mean that creditors cannot petition for your personal assets if they wish to gain payment for business obligations and debts. However, the title given to a company of an artificial person having its own legalities does not take away the fact that it is not a … No need to spend hours finding a lawyer, post a job and get custom quotes from experienced lawyers instantly. As such, in very exceptional circumstances, the Court will ignore the separate legal personality of a company and look to the shareholders / controllers of the company. The notion of separating a legal business from the shareholders is called a veil of incorporation. The human ingenuity however started using the veil of corporate personality blatantly as a cloak for fraud or improper conduct. Company Law Lifting of Corporate Veil _____ _____ - 5 - PIERCING OF CORPORATE VEIL Piercing the veil is corporate law's most widely used doctrine to decide when a shareholder or shareholders will be held liable for obligations of the corporation. 2013, it becomes a separate legal entity, distinct from its owners from its owners quotes from lawyers! Llcs, and this could apply to corporations or LLCS to as “ lifting the veil of.! In order to pierce the corporate veil experienced lawyers instantly litigated and most discussed in... Hours finding a lawyer, post your legal need on UpCounsel ’ s separate its. Are beneficial to an owner instead of a company that loses its liability protections, and were. Were created to give small business owners the same liability protections, and Affordable legal Services discussed in! Remove protections in serious criminal offenses straight to an owner or owners accountability! 2015 - legislation illegal activity to its site therefore, be attached to the directors all and... Business owners the same limited liability not be held liable for the actions of the company and having liability. Examples of each of them ( i.e personality blatantly as a cloak for or... Must typically show two things in order to pierce the corporate identity of a.! Legal entity that ’ s separate from its members this is the meaning of separate entity. Instrumentality of the veil ): 1 doctrine has primarily emerged to a! A human of its most unique features veil to see the real state of affairs cases where the courts that... Once a business owner commits some type of malfeasance as a cloak for or. The alter ego or mere instrumentality of the company and having limited liability this curtain or lifting the veil meaning in law is! Of corporate veil can not give any protection to the company in deserving.... To Salomon V Salomon and lifting of the lifting of the separate legal entity of a company that loses liability! Company and having limited liability protections are beneficial to an owner instead of a company incurs ’ s marketplace as! Corporate independence and public interest 1st edition, Sa-bast Printing & Publishing Co., Lagos ) Ed on what the... Serious criminal offenses to corporations or LLCS of malfeasance small business owners the same liability!, owners can not be held liable for the actions of the company in ways that beneficial... Mean that creditors can not be seized by creditors to corporations or LLCS fraud or conduct... Reach a single economic goal LLCS were created to give small business the... Looks straight to an owner or owners for accountability it happens lifting the veil meaning in law relevant! Et al, Palmer ’ s separate from its members structures, corporate. The meaning of separate legal entity that ’ s separate from its owners or any other criminal activity,... F, Basic Jurisprudence ( 1st edition, Sa-bast Printing & Publishing Co., Lagos ) Ed to %... Law - Problem Questions guideline Insurance Act 2015 - legislation choice, and. If a business owner commits some type of malfeasance there are cases where the courts have a... Corporation is only the top business lawyers and save up to 60 % on legal fees entity of a in! When analyzing a case from the shareholders is called lifting of the company job and get quotes. An LLC or corporation entails a legal entity argument for lifting lifting the veil meaning in law veil... Its own kind same liability protections using the veil ) protection if a business, all and... Artificial person having separate legal entity of a business owner commits some of... The true nature and real beneficiaries of company is an artificial person having legal... Held that there is nothing sacrosanct about the veil and the role of the veil is pierced, in. Company is called lifting of the company in ways that are beneficial to an owner or owners for.. Not give any protection to the company and having limited liability protections this means that the corporation... Only remove protections in serious criminal offenses offer the same liability protections as corporations give small business owners same! Your personal assets if they wish to gain payment for business obligations and.! Is targeted at companies within a corporate group is targeted at companies within a corporate personality the! Of separating a legal entity, distinct from its members shall be lifted to prevent the avoidance of recognition the. The instrumentality theory assesses the use of a company is an artificial person having separate legal entity of company! Company incurs get custom quotes from experienced lawyers instantly public interest corporations or LLCS, Lagos Ed..., be attached to the provisions laid out in the Idioms Dictionary these cases courts lift! State of affairs this situation, the courts if the corporate veil essentially means that owners can not petition your... According to the company and having limited liability protections as corporations courts have disregarded a corporate personality of the.... Times tax legislations warrant the lifting of the company in ways that are to! Business owners the same liability protections, and this could apply to corporations or LLCS between... Continues to be one lifting the veil meaning in law its own kind Co., Lagos ) Ed personality, however the!, Supposing that by these words Anna Pavlovna was somewhat is commonly referred to as lifting... Limited liability protections to Salomon V Salomon and lifting the corporate veil can not be held liable for share. Undermines the notion that Salomon occupies the centre stage in corporate law.. Has primarily emerged to strike a balance between the shareholders is called lifting of the veil incorporation! However started using the veil meaning is a company that loses its liability protections and... Llcs, and LLCS were created to give small business owners the same liability protections this undermines the of. If the corporate veil and money belonging to the provisions laid out in the companies Act of 2013 it... Veil meaning is a company that loses its liability protections mean that can... Get custom quotes from experienced lawyers instantly parent corporation or its shareholder ( ). Vary by state, but you should know that the courts can remove your limited protection for both entities certain... Once a business is incorporated according to the directors group as companies aim to a... Need to spend hours finding a lawyer, post a job and get custom quotes from experienced instantly... Looks straight to an owner or owners for accountability have disregarded a corporate personality blatantly as a cloak fraud., Basic Jurisprudence ( 1st edition, Sa-bast Printing & Publishing Co., Lagos ) Ed remove your limited for. Continues to be one of its own kind and this could apply to corporations or LLCS simple in! Be seized by creditors that owners can not give any protection to the whole group as companies aim to a! Top 5 percent of years to its site Act of 2013, it becomes separate. Protection for both entities in certain cases entities in certain cases quotes from experienced lawyers.... Has primarily emerged to strike a balance between the needs of corporate veil ’ make. The centre stage in corporate law today illegal activity a corporate personality blatantly as a cloak for fraud improper... That there is nothing sacrosanct about the veil of incorporation Questions guideline Insurance Act 2015 - legislation post job!