“In Australia it is still impossible to discern any broad principle of company law indicating the circumstances in which a court should lift the corporate veil”.15
As illustrated, it can be quite difficult to list the cases in which the corporate veil will be pireced.16 Herron CJ contends that authorities in which the corporate veil has been pierced have not been of such consistency that any principle can be adduced. 17 Rogers AJA also takes a similar view, arguing that there is no unifying principle which clearly underlies the occasional decision of the courts to pierce the veil of incorporation. Despite an ad hoc explanation which might be offered by a court that so decides, there is no distinct approach that can be derived from these authorities. 18 …show more content…
However, in certain circumstances this corporate privilege is used as a mean of exploiting loopholes in the legal system, leaving the courts with the option of uncovering the corporate veil and imposing liability upon individuals within the corporation.
Today, the courts will rather enforce the principle of separate legal entity to a company as in the case of Salomon v Salomon Co Ltd, than apply the doctrine of piercing the corporate veil. However, the courts will not hesitate to pursue a person who willingly takes advantage of the corporate legal system by acting in a fraudulent manner. The intention of the law is to create a fair and just process of incorporation as evident in both judicial decisions and statutory provisions. However, with this principle of separate legal status comes some vagueness and ambiguity, making it vital to take the facts of each case on its
As illustrated, it can be quite difficult to list the cases in which the corporate veil will be pireced.16 Herron CJ contends that authorities in which the corporate veil has been pierced have not been of such consistency that any principle can be adduced. 17 Rogers AJA also takes a similar view, arguing that there is no unifying principle which clearly underlies the occasional decision of the courts to pierce the veil of incorporation. Despite an ad hoc explanation which might be offered by a court that so decides, there is no distinct approach that can be derived from these authorities. 18 …show more content…
However, in certain circumstances this corporate privilege is used as a mean of exploiting loopholes in the legal system, leaving the courts with the option of uncovering the corporate veil and imposing liability upon individuals within the corporation.
Today, the courts will rather enforce the principle of separate legal entity to a company as in the case of Salomon v Salomon Co Ltd, than apply the doctrine of piercing the corporate veil. However, the courts will not hesitate to pursue a person who willingly takes advantage of the corporate legal system by acting in a fraudulent manner. The intention of the law is to create a fair and just process of incorporation as evident in both judicial decisions and statutory provisions. However, with this principle of separate legal status comes some vagueness and ambiguity, making it vital to take the facts of each case on its