03May2010
Piercing the Corporate Veil and Enforcement
King Solomon might have split the baby had he not realised the identity of its parent in time. Judges and arbitrators – some 3,000 years later – might be quicker to identify a company’s real group structure, but are they any better in splitting parent from child-subsidiary?
A typical corporate veil piercing case involves a controlling shareholder that sets up an undercapitalized corporation to incur obligations to third parties; the shareholder then siphons off the proceeds of its corporate borrowing received from those third parties. When the company’s debts become due the company has insufficient assets to meet its repayment obligations. At that point, the controlling shareholder reli [...]
