Skip to content

Ask an Academic

  • Home
  • Ask a Question
  • Contact Us
Law and justice statue

Under what circumstances should the court lift the corporate veil?

September 20, 2019 by AskanAcademic.com

A brief explanation of lifting the corporate veil

Question

Under what circumstances should the court lift the corporate veil or should not lift the corporate veil?

Answer

The courts take the stance that they are bound by the principle laid down within Salomon whereby a company is considered an entity separate to its members. Lord Sumption stated that there was a range of circumstances in which the law recognised property or acts of a company, to those who controlled it without ignoring its distinct legal entity.

One of the most common reasons for lifting the veil is in the case of fraud. This is made clear in the case of Jones were the vendor of land sought to evade a decree of permanence of a contract for the sale of land by transferring land to a company he had set up for that purpose and in order to avoid fulfilling that obligation.

In addition, when the company and a subsidiary company are treated as if they were one entity if they partake and conduct the same business. This is however an inconsistent principle, but the application of such a circumstance is highlighted in the case of Firestone Tyre & Rubber Co Ltd .

As noted in the case of Prest , the veil should not be lifted in the first instance, it should only be used as a last resort. The lifting of the veil only applied where the company in question is being used to cover the real acts and identities of those undertaking illegal actions. Whilst of course principles can be extended, the case of Antonio Gramsci Shipping has established that this is an unlikely outcome.

References

Antonio Gramsci Shipping Corp and others v Stepanovs [2011] EWHC 333

Firestone Tyre & Rubber Co Ltd v Llewelyn [1957] 1 WLR 646

Jones v Lipman [1962] 1 ALL ER 442

Prest v Petrodel Resources Limited [2013] UKSC 34

Salomon and Saloman and Co Ltd (1987) A.C 22]

Post navigation

Previous Post:

The Importance of Communication Skills

Next Post:

The need to build a large number of primary schools over four years

Search Q&As

Categories

  • Art Media and Literature (74)
  • Business and Management (256)
  • Computing and ICT (14)
  • Construction and Engineering (35)
  • Education (90)
  • Environmental Sciences (2)
  • Finance and Economics (91)
  • Health (64)
  • Languages (12)
  • Law (88)
  • Mathematics and Statistics (2)
  • Medical Sciences (19)
  • Politics and International Relations (83)
  • Research Methodology (1)
  • Science (49)
  • Social Sciences (101)

Archives

Who We Are

Askanacademic.com is owned and operated by All Answers Ltd, a company registered in England and Wales. Company Registration No: 4964706. VAT Registration No: 842417633. Data Controller No: Z1821391.

Registered office:
Venture House
Cross Street
Arnold
Nottingham
NG5 7PJ

Main Navigation

  • Home
  • Ask a Question
  • Contact Us

Legals

  • Cookie Policy
  • Privacy Policy

Popular Categories

  • Business and Management
  • Law
  • Finance and Economics
  • Health
An an Academic Logo
© 2023 Ask an Academic | WordPress Theme by Superb Themes
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Reject
Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT