Lifting of Corporate Veil

Abstract

The incorporation veil theory is a legal term that distinguishes the identity of a company from the identities of its owners and prevents them from being individually responsible for the debts and other liabilities of the company. Although a corporation is a distinct legal body, it is not possible to ignore the fact that it can only operate through the individual agents that make it up. Because an artificial human is unable to do something criminal or dishonest, it may be appropriate to strip the corporate personality façade to recognize the people who are really guilty. This is known as corporate curtain raising. In addition to the legislative guidelines for raising the corporate curtain, courts often raise the corporate veil to see the current state of affairs. However, while the legislature and the courts have now permitted the corporate veil to be removed in certain cases, it should be remembered that the concept of the incorporation veil is still the norm and the exceptions to this rule are the instances of raising or piercing the veil.