Lifting the Corporate Veil
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The document discusses the concept of corporate personality and lifting the corporate veil. Corporate personality means a company's liabilities are the legal responsibility of the company and members will not be liable for debts. Normally there is a veil between the company and its members. However, in exceptional cases like fraud, improper conduct, or public interest, courts may lift the veil and disregard the separate legal entity to hold individual members responsible. The document outlines some key cases and circumstances under which courts have lifted the veil, including for the benefit of revenue, where the company is being used to avoid legal obligations, or where it is essentially a single economic entity.
![Meaning Of Lifting Of
The Corporate Veil
• Doctrine of Lifting the Veil:
[Dec.: 2012]
› When a Company registered under the act, all the dealings with
the company will be in the name of company, and the members
will be disregarded.
› This shows that there is a veil drawn between the company and
its members.
› This veil is partition or curtain between the co. & its members.
› Following this principle the Courts in most cases have refused to
go behind the curtain & see who are the real persons composing
the company.](https://image.slidesharecdn.com/clsession8-131118112858-phpapp01/85/Lifting-the-Corporate-Veil-4-320.jpg)
Lifting the Corporate Veil
- 2. Corporate personality: Corporate personality means that – “the company’s liabilities are the legal responsibility of the company and the members will not be liable for the company’s debts”
- 4. Meaning Of Lifting Of The Corporate Veil • Doctrine of Lifting the Veil: [Dec.: 2012] › When a Company registered under the act, all the dealings with the company will be in the name of company, and the members will be disregarded. › This shows that there is a veil drawn between the company and its members. › This veil is partition or curtain between the co. & its members. › Following this principle the Courts in most cases have refused to go behind the curtain & see who are the real persons composing the company.
- 5. Cont. But sometimes the necessity of the situation may compel the authorities to disregard the corporate legal entity & look to individual members who are in fact the real beneficial owners of all corporate property; And this fact known as…….. Case - Lee v/s Lee’s Air Farming Ltd. Case – Abdul Haq v/s Das Mal The Court will Lift the veil where it is essential to secure justice, in public interest or for the benefit of revenue. But it must be keep in mind that a separate legal entity is still a general rule.
- 6. Cont. • The corporate entity will be disregarded only in exceptional cases. • This case may be divided in: – Under Judicial Interpretation – Under Statutory Provision
- 7. Judicial Provisions 1. 2. 3. 4. 5. 6. 7. Fraud Or Improper Conduct: For Benefit Of Revenue: Enemy Character: Company Avoiding Legal Obligations: Single Economic Entity: Agency Or Trust: Public Interest:
- 8. Statutory Provisions 1. 2. 3. 4. Reduction Of Number Of Members: Fraudulent Trading: Misdescription Of The Company: Holding And Subsidiary Companies:
- 10. Lesson For LIFE