Limiting the liability of the owners of a business is often

Limiting the liability of the owner(s) of a business is often the primary motive for using the corporate form. Under what circumstances may the use of a corporation not shield the owner(s) from al liabilities of the business?

Solution

When a corporate form of entity is established, the association is known by the name of the company and all the members are clothed together and protected in their individual obligations. However, this veil of corporate personality is used for some dishonest and fraudulent purpose. In that case, court will look into the reality and lift the corporate veil.

In the following cases, court has lifted the corporate veil-