coporate veil
This query is : Resolved
12 September 2009
i m unable to understand of concept of lifting of corporate veil plz give me some examples on that concept ?
Soumitra Chawathe
(Expert)
22 September 2009
Dipak,
A company is an artifical judicial person so it has got a distinct legal personality. This is a statutory previlege and must be used for legitimate business purposes only. If fraudulent and dishonest use of this artificial personality is made, then the law would break or pierce the corporate veil to find out the real motive of the fraud.
A corporate veil is a shield which the directors of a company can use for hiding their criminal / unethical activities.
E.g. In case of high profits, the company may spend / divert the money on unethical / unnecessary activities or say incorporation of a new group company or any other matter just to deny bonus to its workers or payment of dividend to its members.
A company is an artifical judicial person so it has got a distinct legal personality. This is a statutory previlege and must be used for legitimate business purposes only. If fraudulent and dishonest use of this artificial personality is made, then the law would break or pierce the corporate veil to find out the real motive of the fraud.
A corporate veil is a shield which the directors of a company can use for hiding their criminal / unethical activities.
E.g. In case of high profits, the company may spend / divert the money on unethical / unnecessary activities or say incorporation of a new group company or any other matter just to deny bonus to its workers or payment of dividend to its members.
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