Piercing the Corporate Veil, Foundations and Effects

Following adoption of the notion that a company possesses a separate legal personality from those of its shareholders, jurists had to face numerous challenges in this regard. One of the most important of these challenges is ambiguity concerning separation of the responsibility of the company from that of the partner or shareholder in accordance with the abovementioned distinction. When a legal entity commits a misconduct and behind it there are shareholders or partners who direct the main intention of the company and are actually considered its controllers, relying on various foundations judges attempt to pierce the veil of the legal personality of the company, and place the responsibility upon an alter ego.Lifting the legal personality of the company, which is exceptional, follows certain intellectual foundations and is witnessed more frequently in judgments rendered by courts. This article reviews and criticizes a sample of these judgments.