Shareholder Enjoys Liability A Corporation â€Myassignmenthelp.Com

Question: Discuss About The Shareholder Enjoys Liability A Corporation? Answer: Intrroducation In normal circumstances, if an organisation is sued, then its shareholders cannot be brought into the lawsuit, due to the principle of the corporate veil. accounting to Lam (2015), this doctrine is used to define the difference between a company and its shareholders. The shareholder enjoys limited liability in a corporation. Butusina (2013) provided that the term piercing of corporate veil is used by the court to ignore the limited liability clause and holding the shareholders liable for debt and obligation of a company. The shareholders have a general financial duty of faithfulness and carefulness towards the company to perform their corporate duties. The corporate veil is pierced by the court when shareholders or board are sued for negligence or for other liabilities, due to non-performance of their duties. As per Macey and Mitts (2014), the court can pierce the organisations corporate veil in various circumstances such as commitment of fraud, injustice, misappropriation of public money, failure of complying with corporate bylaws and failure to maintain proper records. In Prest v Petrodel Resources Ltd [2013] 2 AC 415 case, the court provided the requirement of the doctrine of piercing of corporate veil to hold shareholders responsible for their conducts (Lightman and Hargreaves 2013). In another case of AB v Smallbone (No 2) [2001] 1 WLR 1177, the court decided that reasons for piercing of corporate veil include fraud and scam by the shareholder, but which actions which considered as fraudn and scam was bsed on situation of different cases (Lee 2015) References Butusina, L., 2013. Piercing the corporate veil.Revista Romana de Drept al Afacerilor, Marketing, p.83. Lam, C.L., 2015. Piercing the Corporate Veil. LEE, P.W., 2015. The enigma of veil-piercing.International Company and business Law Review,26(1), p.28. Lightman, D. and Hargreaves, E., 2013. Petrodel Resources Ltd v Prest: where are we now?.Trusts Trustees,19(9), pp.877-888. Macey, J. and Mitts, J., 2014. Finding Order in the Morass: The Three Real Justifications for Piercing the Corporate Veil.Cornell L. Rev.,100, p.99.