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1)Can veil of incorporation be lifted in phoenix company?
2) In group situations (parent and subsidiary), 3 reasons are being identified in order to lift the veil of incorporation :
a) Subsidiary is mere facade concealing true facts
b) Subsidiary is acting as agent for parent company
c) Group is to be treated as single economic entity.Sir my questions is that all these 3 conditions need to be satisfied in order to lift the veil of incorporation between parent and subsidiary? Or even if any 1 of these conditions is satisfied then the veil would be lifted?
It can be lifted in any company … but the court is reluctant to go against the principle of separate corporate identity so examples and instances of lifting the veil are few and far between
For a), if it’s a contrived situation to hide true facts, the Court may be prepared to lift the veil
For b), yes, ok, if the subsidiary is acting as the agent of the parent then the parent would be potentially liable
For c), this is always an example of lifting the veil because group a financial statements are prepared as though all the entities within the group were aggregated to be just one single corporate body
So, in answer to your question, no, it’s not necessary for all three to be apparent for the Court to lift the veil.
Any of the three will do, as also will any combination of the three
OK?
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