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What is the veil of incorporation and what is the purpose of lifting the veil? Is it true that court lift the veil of incorporation to identify shareholders of the company?
Sir Vijay!
Can you please respond to this question because I do not understand the purpose of lifting the veil…What is the veil of incorporation and what is the purpose of lifting the veil? Is it true that court lift the veil of incorporation to identify shareholders of the company?
Hi Syed,
The veil is a theoretical protection for shareholders. It basically means that shareholders are not on a day to day basis personally liable for the debts of a company. This is why many people like to operate their business as a company because they are NOT personally liable due to the veil.
However, if a director or shareholder does something wrong like fraud then the veil will be lifted and this basically means that the director or shareholder becomes personally liable i.e. they lose the protection.
I hope this helps?
Kind regards,
Vijay
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