Review of Contemporary Business Research

Piercing the Veil of Business Incorporation: An Overview of what Warrants It
Shittu A. Bello, Ogwezzy C. Michael

Abstract
From the age long decision of House of Lords in the case in Salomon v. Salomon & Co Ltd (1897) AC 22 (HL), it became established that a corporation is a different entity from the owners, shareholders or directors. A corporation has a life of its own and characteristics of perpetual succession in the event of the death or retirements of the owners or the directors that were appointed through the memorandum and articles of association. Upon the incorporation of a company, it acquires capacity of artificial person as such it can own property, become a party to a contract, act in a tortuous manner and become tortuously liable, commit a crime, can sue and be sued, has a nationality and therefore becomes domicile in nature and even has rights that could be attributed to a natural person though artificial in character. A company acquires the characteristics of a distinct legal person upon incorporation. If the company commits a civil or corporate crime such a company could be sued in its corporate name, if a judgment is obtained against such a corporation, it is only natural that the company complies with the decision of the court but where it fails, the veil covering the incorporation will be lifted to see those natural persons being the company and probably compel them to comply with the judgment of the court or be made to face the direct penalty of the law through committal to prison. A corporate veil could be lifted whenever the court wants to find out who is behind the fraudulent and improper conduct of a company. Apart from the forgoing, this article intends to examine in detailed manner the legal concept of piecing or lifting the veil of incorporation and what warrants it.

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