Define: Piercing The Veil

Piercing the veil is a legal concept that allows a court to disregard the separate legal personality of a corporation or other limited liability entity and hold its owners or shareholders personally liable for the entity’s actions or debts. This typically occurs when the corporate form is abused or used to perpetrate fraud, injustice, or unfairness, or when there is evidence of inadequate capitalisation, commingling of assets, or failure to observe corporate formalities. Piercing the veil is an equitable remedy that is applied cautiously and sparingly by courts to prevent injustice or abuse of the corporate form. It is often invoked in cases involving closely held corporations, where there is a close relationship between the owners and the business, and where the owners have exercised control over the entity in a manner that undermines the separation between personal and corporate assets and liabilities. Piercing the veil is a complex and fact-specific legal doctrine that requires careful consideration of the circumstances and evidence in each case.

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This glossary post was last updated: 29th March, 2024.