Macpherson, Jay (2004). "The Travels of Sethos". Lumen: Selected Proceedings from the Canadian Society for 18th-Century Studies. 23. Thus it is abundantly clear that incorporation does not cut off personal liability at all times and in all circumstances. “Honest enterprise, by means of companies is allowed; but the public are protected against kitting and humbuggery”. The sanctity of a separate entity is upheld only in so far as the entity is consonant with the underlying policies which give it life. The chief advantage of incorporation from which all others follow is the separate entity of the company. In reality, however, the business of the legal person is always carried on by, and for the benefit of, some individuals. In the ultimate analysis, some human beings are the real beneficiaries of the corporate advantages, “for while, by fiction of law, a corporation is a distinct entity, yet in reality it is an association of persons who are in fact the beneficial owners of all the corporate property.” And what the Salomon case decides is that ‘in questions of property and capacity, of acts done and rights acquired or, liabilities assumed thereby…the personalities of the natural persons who are the companies corporators is to be ignored”. Lifting of the corporate veil means disregarding the corporate personality and looking behind the real person who are in the control of the company. In other words, where a fraudulent and dishonest use is made of the legal entity, the individuals concerned will not be allowed to take shelter behind the corporate personality. In this regards the court will break through the corporate shell and apply the principle of what is known as “lifting or piercing through the corporate veil.” And while by fiction of law a corporation is a distinct entity, yet in reality it is an association of persons who are in fact the beneficial owners of all the corporate property. In United States V. Milwaukee Refrigerator Co., the position was summed up as follows:

A simple example would be where a businessperson has left their job as a director and has signed a contract to not compete with the company they have just left for a period of time. If they set up a company which competed with their former company, technically it would be the company and not the person competing. [1] But it is likely a court would say that the new company was just a "sham" or a "cover"; and that as the new company is completely owned and controlled by one person that the former employee is deliberately choosing to compete, and so is in breach of that non-competing contract. The company was held to be shown when it was used to try and dodge existing obligations. The corporate veil could be lifted.

Where at the end of its financial year, the company has subsidiaries, it must lay before its members in general meeting not only its own accounts, but also attach therewith annual accounts of each of its subsidiaries along with copy of the board’s and auditor’s report and a statement of the holding company’s interest in the subsidiary.

Thus when “Tata Company” or “German Company” or “Government Company” is referred to, we look behind the smoke-screen of the company and find the individual who can be identified with the company. This phenomenon which is applied by the courts and which is also provided now in many statutes is called “ lifting of the corporate veil”. As a consequence of the lifting of the corporate veil, the company as a separate legal entity is disregarded and the people behind the act are identified irrespective of the personality of the company. So, this principle is also called “disregarding the corporate entity”. LIFTING THE CORPORATE VEIL Meaning of the doctrine: Greer, John Michael (1997). Circles of Power: Ritual Magic in the Western Tradition. Llewelyn Worldwide. ISBN 978-1-56718-313-9. EJ Cohn and C Simitis, Lifting the Veil' in the Company Laws of the European Continent' (1963) 12(1) 'The International and Comparative Law Quarterly 189Ziolkowski, Theodore (Summer 2008). "The Veil as Metaphor and Myth". Religion & Literature. 40 (2). Minton v. Cavaney, 56 Cal.2d 576 (1961). [47] Mr. Minton's daughter drowned in the public swimming pool owned by Mr. Cavaney. Then-Associate Justice Roger J. Traynor (later Chief Justice) of the Supreme Court of California held: "The equitable owners of a corporation, for example, are personally liable...when they provide inadequate capitalization and actively participate in the conduct of corporate affairs." Several other sources influenced the motif of the veiled Isis. One was a tradition that linked Isis with nature and the goddess Artemis. European art has a long tradition of personifying nature as a motherly figure. Starting in the 16th century, this motif was influenced by the iconography of the goddess Artemis of Ephesus (also known under the name of her Roman equivalent, Diana). The Ephesian Artemis was depicted with round protuberances on her chest that may originally have been jewelry but came to be interpreted as breasts. Isis was sometimes compared with Artemis, and the Roman writer Macrobius, in the fourth century CE, wrote, "Isis is the earth or nature that is under the sun. That is why the goddess's entire body bristles with a multitude of breasts placed close to one another [as in the case of Artemis of Ephesus], because all things are nourished by earth or by nature." Thus, the 16th-century artists represented nature as Isis-Artemis with multiple breasts. [5] P.W. Ireland, ‘The Rise of the Limited Liability Company’ (1984) 12 International Journal of the Sociology of Law 239.

Farrar (n 8). See also, John Lowry & Arad Reisberg, Pettet’s Company Law: Company Law and Corporate Finance (4th edn, Pearson 2012). In course of time, the doctrine that a company has a separate and legal entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the corporation can be lifted and its face examined in substance. The legal fiction of corporate veil, thus established, enunciates that a company has a legal personality separate and independent from the identity of its shareholders. 9 Hence, any rights, obligations or liabilities of a company are discrete from those of its shareholders, where the latter are responsible only to the extent of their capital contributions, known as “limited liability”. 10 This corporate fiction was devised to enable groups of individuals to pursue an economic purpose as a single unit, without exposure to risks or liabilities in one’s personal capacity. 11 Accordingly, a company can own property, execute contracts, raise debt, make investments and assume other rights and obligations, independent of its members. 12 Moreover, as companies can then sue and be sued on its own name, it facilitates legal course too. 13 Lastly, the most striking consequence of SLP is that a company survives the death of its members. 14 The Exception of Veil Piercing Not actually lifting the veil, not saying that we are entity merely saying that one entity is bound by the actions of the other.House of Lords Lord Keith said that it is appropriate to pierce the corporate veil only when special circumstances exist indicating that a company is a facade to conceal the true facts. On this basis Lord Keith said that he doubted the Country Appeal decision in DHN.

C Alting, 'Piercing the corporate veil in German and American law - Liability of individuals and entities: a comparative view' (1994–1995) 2 Tulsa Journal Comparative & International Law 187 In the case of Madan lal v. Himatlal & Co. [vii]the respondent filed suit against a private limited company and its directors for recovery of dues. The directors resisted the suit on the ground that at no point of time the company did carry on business with members below the legal minimum and therefore, the directors could not be made severally liable for the debt in question. It was held that it was for the respondent being dominus litus, to choose persons of his choice to be sued. The House of Lords, however, upon appeal, reversed the above ruling, and unanimously held that, as the company was duly incorporated, it is an independent person with its rights and liabilities appropriate to itself, and that “the motives of those who took part in the promotion of the company are absolutely irrelevant in discussing what those rights and liabilities are”. 3 Thus, the legal fiction of “corporate veil” between the company and its owners/controllers 4 was firmly created by the Salomon case. IMPLICATIONS OF SALOMON V SALOMONA company set up to carry out a series of fictitious transactions to try and protect the government of the Republic of Congo