This dissertation was written as part of the LLM in Transnational and European
Commercial, Arbitration, Mediation and Energy Law
at the International Hellenic
University.
This study focuses on the lifting of the corporate veil in UK and in Cyprus, as the latter
has been applied as an exception to the principle of the separate legal personality of
the companies in Common Law countries. The principle of the "veil of incorporation"
was introduced in 1897 in Salomon v. Salomon & Co Ltd case in which the House of
Lords brought into English law the twin concepts of corporate entity and limited liability.
More specifically, the Court laid down the principle that a company is a distinct legal
person entirely different from its members. However, the human intelligence and
ingenuity started using the veil of corporate personality unlimitedly as a mean for fraud
or improper conduct. As a result it became necessary for the Courts to lift the corporate
veil in order to have the ability to look at the persons behind the company who are the
real beneficiaries of the company. In regard with the above and pursuant to the need to
ensure the proper use of the concept of the corporate veil, the doctrine of the lifting of
the corporate veil was born. Further to the courts’ approach when lifting the corporate
veil, the same appears in the legislation of the two countries too, as one can notice that
beside the judicial grounds there are existing legal grounds for the lifting of the
corporate veil.
If we want to give an explanation of the “
Lifting of the corporate veil”
it is crucial to
mention that according to the lifting of corporate veil there is a possibility to disregard
the corporate personality and look behind the real person who are in the control of the
company. In other words, where a fraudulent and dishonest use is made of the legal
entity, the individuals concerned will not be allowed to take shelter behind the corporate
personality. In this respect the court will break through the corporate shell and apply the
principle of what is known as “lifting or piercing through the corporate veil.”
Collections
Show Collections