# Lifting or Piercing the Corporate Veil
## What is the 'Corporate Veil'?
The corporate veil is the separate legal existence enjoyed by a company - distinct from the people who own and manage it.
Think of it as an artificial curtain created by law that separates:
- The Company (on one side)
- The Members, Directors, Employees (on the other side)
## Effect of the Corporate Veil
- Only the company is liable for acts/defaults done in the company's name.
- Even if directors or employees acted on behalf of the company, the LIABILITY rests on the company - not on them personally.
## What is 'Lifting' or 'Piercing' the Corporate Veil?
Lifting the corporate veil = looking BEHIND the company as a legal person to find the real people - the members or managers.
It means:
- Disregarding the corporate entity
- Paying regard, instead, to the realities behind the legal facade
When courts do this, they treat the members/managers directly rather than the company.
## When Does the Court Lift the Veil?
Only in appropriate circumstances - the court does not do so casually. Common grounds include:
- Fraud or improper conduct
- Tax evasion
- Avoidance of legal obligations
- Company being used as a sham or facade
- Determining the character of a company (e.g., enemy company in wartime)
- Statutory provisions (e.g., for reduction of members below minimum)
## Visual Concept
```
Company (legal person) <-- Veil --> Members/Directors/Managers
| |
Liability normally Liability when veil is lifted
rests here shifts here
```