Lifting the Corporate Veil for Directors and Shareholders’ Liability: Matters Arising

Abstract

The doctrine of lifting the corporate veil constitutes the exception to the concept of corporate legal personality, but the ambit of the exception and the appropriate circumstances in which it should apply are contested both in case law and legal jurisprudence. It is far from settled when the corporate veil can be lifted, and no clear guiding principles have emerged in the United Kingdom and other common law jurisdictions such as Nigeria. In recent time, however, the authoritative decision of the UK Supreme Court in the case of Prest v Petrodel Resources Ltd introduced new principles of ‘‘evasion’’ and ‘‘concealment’’. Matters of legal significance do arise from the decision. For instance, in drawing distinctions between the principles of ‘‘evasion’’ and ‘‘concealment’’ the Court did not clarify beyond legal confusion the factual circumstances in which lifting the corporate veil would be appropriate and necessary. In this article, we examine the law on lifting the corporate veil as it has evolved in case law through the centuries. From a jurisprudential analysis of the judgment in Prest v Petrodel Resources Ltd , we examine the matters arising and proffer key suggestions towards striking the optimum balance between the concept of corporate legal personality and the doctrine of lifting the corporate veil. Keywords: Corporate legal personality, Lifting the veil, Prest v Petrodel, Limited Liability, Separate Legal Personality DOI: 10.7176/JLPG/120-06 Publication date: April 30 th 2022