Essay On Piercing The Corporate Veil

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Meaning of ‘Piercing the Corporate Veil’
Starting a limited liability company is always advantageous since directors are not directly liable for any debts that may be incurred by the business. When the corporate veil is pierced, this protection seizes and the business directors and, or shareholders are legally responsible for company liabilities.
‘Piercing the corporate Veil’ is therefore the legal removal of what separates the shareholders from the corporation itself. The Corporate Veil can also be referred to as a legal standing through which corporate owners are protected from the debts and liabilities of a company.
Why pierce the corporate veil?
Goods and services may have been supplied to a particular company
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To argue the case out, the services of an experienced litigation attorney should be sought.

What would happen if the court pierces the corporate veil?
Most courts are very cautious when it comes to holding shareholders liable for the liabilities of the company. As such, beyond-doubt proof must be provided to indicate that the company’s corporate veil has been pierced. With proof, there will be loss of protection and liable parties will be responsible for any company debts.
Parties not part of fraudulent activities are not punished, only the ones responsible for the undertakings that led to piercing the corporate veil will be lose legal separation of their assets to those of the company. The assets will then be taken from them to reimburse creditors.
Why the corporate veil should not be pierced
It may not be a good reason to pierce the corporate veil. Courts do not prefer it either as it portrays the company as a sham. A bad public image of the company may hurt consumer trust and the economy as a whole. Several other alternatives must be sought first and piercing the corporate veil taken as a last resort
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