What is the doctrine of piercing the corporate veil?

Piercing the corporate veil is warranted when “[the separate personality of a corporation] is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, or to confuse legitimate issues.” It is also warranted in alter ego cases “where …

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Herein, what is piercing the corporate veil Why is it important?

A key reason that business owners and managers choose to form a corporation or limited liability company (LLC) is so that they won’t be held personally liable for debts should the business be unable to pay its creditors. … When this happens it’s called “piercing the corporate veil.”

Consequently, what are the exceptions to the doctrine of corporate fiction?

The exception to this rule is when the separate personality of the corporation is used to “defeat public convenience, justify wrong, protect fraud or defend crime.

What is corporate veil in simple terms?

A legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company’s debts and other obligations.

2 Related Question Answers Found

What are 4 circumstances that might persuade a court to pierce the corporate veil?

(1) compete with the corporation, or otherwise usurp (take personal advantage of) a corporate opportunity, (2) have an undisclosed interest that conflicts with the corporation’s interest in a particular transaction, Directors and officers must fully disclose even a potential conflict of interest.

What is a corporate veil explain any four circumstances under which it can be lifted?

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. … Tax Evasion– Sometimes, the corporate veil is used for the purpose of tax evasion or in order to avoid any kind of tax obligation.