Question

What is the “corporate veil” and under what circumstances is an Australian court likely to lift it?

you can take idea of a company being a separate legal entity, how and when Australia court likely lift up and examples of some legislation and cases in Australia to show your research?

As some circumstances are Agency, Fraud, sham, justice, group enterprises, but need further research with example of cases and legislation of country Australia.

Answer 1

Corporate veil is a concept in which action of an organization is considered separate and distinct from the actions of the shareholders. The concept of corporate veil is used to protect the shareholders from being liable for the actions of the organization.

An Australian court is likely to lift corporate veil under different circumstances. For instance court may lift corporate veil to deny the shareholders the protection that the provision of limited liability provides to them. There are certain cases in which Australian courts disregard the separateness of the corporation and the shareholders. In these cases a shareholder is responsible for the actions of the organization as it will be deemed that the actions of the organization were the actions of the shareholders themselves. Australian courts may also lift corporate veil on request of the company itself or on request of shareholders of the company. This will be done to create an enforceable right, or to lessen a penalty or to afford a remedy that would otherwise be denied.

In the case Pioneer Concrete Services Ltd v Yelnah Pty Ltd. courts in Australia lifted the corporate veil to determine the legal personality to the real controllers. The reason for this was that the court wanted to examine the operating mechanism behind the company. In Dennis Willcox Pty Ltd v Federal Commissioner of Taxation the court lifted the corporate veil as there was a partnership between companies in a group and the structure was designed to evade a legal obligation.