Company Law: Lifting the Corporate Veil - Academic's Debate

This report delves into the contentious issue of lifting the corporate veil in company law, focusing on the UK legal context. The analysis begins with the foundational case of Salomon v A Salomon & Co Ltd, which established the principle of separate legal personality. However, the report then examines instances where courts may disregard this principle, such as in cases of fraud or where the corporate structure is used to evade legal obligations, as exemplified by Lubbe v Cape Plc and Prest v Petrodel Resources Ltd. The report also considers the case of Creasey v Breachwood Motors Ltd, which highlights situations where the veil can be lifted to hold company directors liable. Furthermore, it explores the debate on the doctrine's absoluteness, considering the need for a balance between respecting the corporate structure and preventing its misuse. The report references academic sources to provide a comprehensive understanding of the topic.

Running head: COMPANY LAW
Company Law
Name of the Student
Name of the University
Author Note

1COMPANY LAW
Although the courts are not empowered to peep through the corporate veil and bring out the
liability of the directors of the company for every liability that has been incurred by the company as per
the contention brought forward with the case of Salomon v A Salomon & Co Ltd [1897] AC 221 owing to
its separate legal recognition from that of the directors, but there are certain instances where are courts are
authorized to lift the corporate veil for the purpose of exposing the directors towards the liabilities that
has been incurred by the company as has been recognized in the case of Lubbe v Cape Plc [2000] UKHL
41.2 The courts has the entitlement to exercise the power of lifting the corporate veil to point out the
liability of a director for the liabilities that a company has incurred, if it has reached the satisfaction
regarding the fact that the action that has invited the danger of liabilities for the company has actually
been an endeavor of the directors to cover their wrongdoings as has been made evident with the case of
Prest v Petrodel Resources Ltd [2013] UKSC 343. As per the principles that has been established in the
case of Creasey v Breachwood Motors Ltd [1993] BCLC 4804 that a corporate veil casted upon the
management of the company can be lifted for the purpose of internal actors of the company liable for the
liabilities that the company has been made to be exposed to for the purpose of assisting the fraud or
sham5.
1 Salomon v A Salomon & Co Ltd [1897] AC 22
2 Lubbe v Cape Plc [2000] UKHL 41.
3 Prest v Petrodel Resources Ltd [2013] UKSC 34
4 Creasey v Breachwood Motors Ltd [1993] BCLC 480
5 Mucha, Ariel. "Piercing the corporate veil doctrine under English company law after Prest v Petrodel decision."
(2017).

2COMPANY LAW
Reference List
Creasey v Breachwood Motors Ltd [1993] BCLC 480
Lubbe v Cape Plc [2000] UKHL 41.
Mucha, Ariel. "Piercing the corporate veil doctrine under English company law after Prest v Petrodel
decision." (2017).
Prest v Petrodel Resources Ltd [2013] UKSC 34
Salomon v A Salomon & Co Ltd [1897] AC 22