Question

What is lifting of the "corporate veil"? Explain the statutory provisions under w corporate veil of a company may be lifted.​

Answer 1

Answer:

This is known as 'lifting of corporate veil'. It refers to the situation where a shareholder is held liable for its corporation's debts despite the rule of limited liability and/of separate personality. The veil doctrine is invoked when shareholders blur the distinction between the corporation and the shareholders.

In State of U.P. v. Renusagar Power Co.the Supreme Court held that where the holding company holds 100% shares in a subsidiary company and the latter is created only for the purpose of the holding company, corporate veil can be lifted.