By Karen Vandekerckhove
Whilst courts ‘pierce the company veil’, they put out of your mind the separateness of the company and carry a shareholder liable for the corporation’s motion as though it have been the shareholder’s personal. even if as a common rule the courts are reluctant to permit company veil piercing, collectors of an bancrupt company often try and carry the shareholders in charge after they can't receive pride from their debtor. within the usa, in reality, piercing claims represent the only so much litigated quarter in company legislation. This learn clears up a few of the mists placing round the proposal of company veil piercing. What precisely is company veil piercing and during which occasions does it happen? What are the criminal principles concerned? Following a brief evaluation of the appropriate legislations within the six criminal structures which are the topic of this study-those of Belgium, the Netherlands, France, Germany, the uk, and the United States-the writer proceeds with a extra profound research from a practical comparative point of view, ranging from specific events that usually demand shareholder legal responsibility for the money owed of subsidiary businesses. one of the grounds for veil piercing claims the writer discusses the subsequent, besides the sizeable and procedural legislation and demanding instances linked to each one within the six jurisdictions coated:
• undercapitalization;
• asset stripping;
• undue carrying on with of loss-making activities;
• and id or the distinction of the company team as an financial unit.
In the process the presentation, an intensive research of felony scholarship within the zone results in various purposes of some of the theories and doctrines that may be delivered to undergo on veil piercing instances. furthermore, an in-depth dialogue of the foreign size of company veil piercing specializes in the query of which legislation may still govern the legal responsibility of a dad or mum company for the accounts of its subsidiary. all through, the author’s transparent perception into the substantial legislation of veil piercing sheds gentle on conventional misconceptions within the clash of legislation at the factor. She additionally info tasks undertaken by means of a variety of overseas our bodies, together with the United international locations, the association for monetary Cooperation and improvement, the ecu Union, the foreign courtroom of Justice, and the overseas Labour association. Dr Vandekerckhove’s learn is the main complete, far-reaching, and up to date examine of this crucial turning out to be zone of company legislation perform. As such it is going to turn out of serious worth to practitioners, judges, and lecturers within the box, and may end up its worthy anyplace on the planet the place the presence of establishment firms is felt.
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Additional resources for Piercing the Corporate Veil: A Transnational Approach
Sample text
Such information costs render capital raising less efficient. Further, limited liability promotes a free trans fer of shares, in that shares trade at one price regardless of the identity of seller or purchaser, thus limiting the amount of investigation and negotiation needed on the part of the buyer. Limited liability is therefore considered to be indispensable for an organized securities market. 28 On the part of the corporation ' s creditors, limited liability reduces collection costs in that creditors do not need to bring expensive and cumbersome individual collection suits against numerous shareholders of corporations that have defaulted on their obligations.
L. Rev. , 1 47 et seq. 34. 5 23 CHOICE OF LEGAL SYSTEMS The legal systems analysed in this study have been chosen on a double basis . First, a choice has been made in function of the substantive law on corporate groups. Most legal systems still adhere, in substantive corporation law, to the entity doc trine. Corporation law is based on the idea of the single, independent corporation ; rules on corporate groups do not exist generally, although specific subj ects are regulated so as to take into account their existence (mainly in accounting and tax law) .
Although arguably there is no real 'veil ' or rather there are two veils involved, this study also includes cases of 'piercing' between or ' identification' of sister corporations. The concept of cor porate veil piercing is used here as a broad umbrella term. Identification cases are considered as a particular species of veil piercing, amounting to the 'core' of veil piercing law. In addition, veil piercing covers shareholder liability achieved on the basis of independent rules of civil, company and bankruptcy law.