Lifting of Corporate Veil
“LIFTING THE CORPORATE VEIL”- AN OVERVIEW
Definition-Lifting or Piercing the Corporate Veil
Lifting or Piercing the Corporate Veil is a Legal process or proceedings taken to uncover the common shield in respect of any suspicious event happened or to be happened or on the basis of allegation made or to be made against the Company. This piercing process can be compared to a person lifting the curtain of a Drama Stage to know what is actually happening without being the drama commenced. Piercing the Corporate Veil is a Premeditated process with an intention to curtail the unfair advantage enjoyed on forming of a Company.
Merits on Incorporating a Company.
Incorporating a Company is always preferred by active entrepreneurs than commencing a Partnership firm or sometimes a sole proprietorship. The major boons of incorporating a Company are:
1. Limited Liability. Almost all the Companies are started with limited liability status. A Company with Limited Liability indicates that a Members’ loss in a Company is only up to the value of his shares or loan made, if any thing unfortunate happens to the Corporate. The Personal Assets or earnings of Director or the Officer will never be put at risk. But if the event is a fraud or anything outside the purview of the Memorandum of Association (which means “Ultra Vires”) the Directors or “Officers in Default” {Section 5 of Companies Act} will be held for Personal Liability.
2. Protection of Name: The Company’s name will be protected immediately once it is approved by “Registrar of Companies” (herein after called as “ROC”). There will be no chance of another Company being started with the same name or even identical to the Companies Name. Whilst in the case of a Partnership Firm or Sole Proprietorship Concern, the name can be only protected by a Trademark Registration.
3. Existence. As an old proverb indicates, “Members may come and go, but the Company exists forever” is the gist of the Company formation. The Company will
Definition-Lifting or Piercing the Corporate Veil
Lifting or Piercing the Corporate Veil is a Legal process or proceedings taken to uncover the common shield in respect of any suspicious event happened or to be happened or on the basis of allegation made or to be made against the Company. This piercing process can be compared to a person lifting the curtain of a Drama Stage to know what is actually happening without being the drama commenced. Piercing the Corporate Veil is a Premeditated process with an intention to curtail the unfair advantage enjoyed on forming of a Company.
Merits on Incorporating a Company.
Incorporating a Company is always preferred by active entrepreneurs than commencing a Partnership firm or sometimes a sole proprietorship. The major boons of incorporating a Company are:
1. Limited Liability. Almost all the Companies are started with limited liability status. A Company with Limited Liability indicates that a Members’ loss in a Company is only up to the value of his shares or loan made, if any thing unfortunate happens to the Corporate. The Personal Assets or earnings of Director or the Officer will never be put at risk. But if the event is a fraud or anything outside the purview of the Memorandum of Association (which means “Ultra Vires”) the Directors or “Officers in Default” {Section 5 of Companies Act} will be held for Personal Liability.
2. Protection of Name: The Company’s name will be protected immediately once it is approved by “Registrar of Companies” (herein after called as “ROC”). There will be no chance of another Company being started with the same name or even identical to the Companies Name. Whilst in the case of a Partnership Firm or Sole Proprietorship Concern, the name can be only protected by a Trademark Registration.
3. Existence. As an old proverb indicates, “Members may come and go, but the Company exists forever” is the gist of the Company formation. The Company will