COMPANY LAW ā Corporate Veil ā Piercing the Corporate Veil ā Fraud and Lifting the Veil
Principle Statement
One of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraud as in the instant case. ā¦ since a statute will not be allowed to be used as an excuse to justify illegality or fraud ā¦ the Court as occasion demands have to look behind or pierce the corporate veil.
Ratio Decidendi (Source)
Per Galadima, JSC, in Alade v. Alic (Nigeria) Limited (2010) NLC-123-169-2001(SC) at pp. 12ā13; Paras EāA.
"One of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraud as in the instant case. ā¦ since a statute will not be allowed to be used as an excuse to justify illegality or fraud ā¦ the Court as occasion demands have to look behind or pierce the corporate veil."
Explanation / Scope
This principle establishes that the corporate veil can be pierced where a company is used for fraud or illegality. The principle applies where incorporation is used to justify fraud. It ensures that companies cannot hide behind their separate legal personality to commit fraud. The principle reflects the exception to the rule in Salomon v. Salomon. It prevents abuse of the corporate form. The court must determine if fraud is involved. The principle provides guidance on when the veil will be lifted. It ensures that justice is not defeated by corporate structures.
