Challenging the Limited Liability of Parent Companies: A Reform Agenda for Piercing the Corporate Veil

Abstract

This article examines the liability of parent corporations within company groups in Australia, to determine whether the law needs to be reformed. It gives an overview of the theory behind limited liability and situations in which piercing the corporate veil is arguably justified. It then considers whether the veil should be pierced to impose liability on parent companies. It makes the case that fault should be the basis of liability, and it looks at examples of veil‐piercing laws overseas to determine whether any of them might provide an appropriate template for liability. Recent Australian initiatives are considered before making suggestions for reform.