Lifting Up of Corporate Veil 

What is Corporate Veil?

Corporate Veil is kind of fictional Veil which separates the identity of Shareholder of the company from the company itself. It makes sure that Shareholder should not be liable for the actions of the Company, which protects the personal assets  of the Shareholder.

In many cases Company commits various illegal acts behind the corporate personality in such cases Court lift up the veil to see behind the corporate entity and take actions to make the controlling person liable for the debts and obligations of the Company.

Grounds for lifting up of Corporate Veil:-

1. Fraud or Improper Conduct: In case, the promoter or the controlling person of the Company commits any fraud on the Company so that they won’t be held liable for such act. Herein, the Court will uplift the Veil to see the behind separate entity of the company.

2. The Company is mere Cloak or Shame: In cases where the Company is merely incorporated to hide illegal and fraudulent conducts.

3. Company is used for Tax Evasion: Where the Company is solely incorporated for the evasion of the tax by applying for the tax exemption.

4. Public Interest: The courts have the discretion to lift the veil to protect public policy and prevent transactions that are in contravention to public policy.

The Courts lift this Veil to held the real person liable who is hidden behind the Corporate personality. When the Controlling person is held liable his personal assets are taken into account by the Court to provide justice to the Victim individually or some other corporate entity.