Company Law
Lifting the Corporate Veil
Separate corporate personality, limited liability and exceptional circumstances in which the court may look behind the company.
Basic rule: the company is a separate person
A properly incorporated company has rights and liabilities separate from its shareholders and directors. A company debt is not ordinarily a shareholder’s personal debt. This is the foundation of limited liability.
Why might the veil be lifted?
Where legal personality is used as an instrument of fraud, evasion of law or avoidance of an existing obligation, the court may exceptionally examine the reality behind the form. Ownership or control by one person is not enough by itself.
Relevant indicators
- A sham or façade structure
- Deliberate mixing of company and personal assets
- Transfers designed to mislead creditors
- An intention to evade an existing contract or court order
- Statutory situations imposing personal liability on a director
No automatic result
Lifting the veil is not a general fairness jurisdiction. Clear evidence must show why separate personality was abused. Fraud, civil wrong, guarantee and director-liability claims may provide separate legal bases.
Sources
Relevant legislation and official sources
Companies Law, Cap. 113 — Legislation DatabaseTRNC Supreme Court Judgment SearchThis publication is for general information and does not constitute legal advice on a particular matter. Legislation and case law may change. Seek legal assistance promptly, especially where a court or application deadline may apply.