In what circumstances may the veil of incorporation be lifted at common law?

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Company Law

In what circumstances may the veil of incorporation be lifted at common law?

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The 1897 case of Salomon v Salomon & Co Ltd [1897] AC 22 firmly established the principle that a company has a separate legal identity to that of its members. These separate legal identities are protected by the veil of incorporation, which can only be disregarded by the courts in particular circumstances.

The established situation where the court will lift the veil of incorporation is where a company has been formed to avoid legal obligations. For example, in Jones v Lipman [1962] 1 All ER 442, land was sold to a newly formed company to avoid an order for specific performance that would otherwise have been made against an individual. In this case, the court made an order for specific performance against both the individual and the company. In Gilford Motor Co v Horne [1933] Ch 935 CA, the court granted an injunction against both Mr Horne and a company he had formed to avoid a restriction in an employment contract.

The corporate veil has also been lifted where a subsidiary has been found an agent of its parent