Corporate Veil Research Articles

A DESCONSIDERAÇÃO DA PERSONALIDADE JURÍDICA APLICADA A ADMINISTRADORES NÃO SÓCIOS: ANÁLISE DE CRITÉRIOS E IMPLICAÇÕES PRÁTICAS NO DIREITO BRASILEIRO

This article explores the application of piercing the corporate veil in non-partner administrators, a crucial theme for protecting creditors, consumers, and workers from corporate fraud. Through doctrinal and jurisprudential analysis, with a focus on the Special Appeal No. 1.862.557 from the Superior Court of Justice (STJ), the paper discusses the limits and criteria for personally holding professional administrators accountable, who do not have a shareholding position, in cases of purpose deviation and asset confusion. Furthermore, the article examines the practical implications of such liability in corporate, consumer, and labor law, as well as its impact on financial markets and corporate governance. The study also compares different legal systems, analyzing how corporate veil piercing is handled internationally.

Piercing the corporate veil post-Prest

Piercing the corporate veil post-Prest

Application of Piercing the Corporate Veil in Indonesia: A Legal and Islamic Perspective

Application of Piercing the Corporate Veil in Indonesia: A Legal and Islamic Perspective

Piercing the corporate veil in Mauritius: a comparative study with the United Kingdom

Purpose The purpose of this paper is to bring clarity to the concept of piercing the veil of incorporation in Mauritius. This will allow students, researchers, academics and practitioners to engage further in research on the topic of incorporation of companies. Design/methodology/approach To conduct the study, the doctrinal legal research approach will be used. The inquiry will examine the numerous laws and case laws that permit the lifting of the corporate veil, so exposing the agents of the corporation to accountability on both a criminal and civil level. A comparison of Mauritius and the UK legal systems will be conducted to assess the efficacy of the former. Findings There are significant loopholes in the legislative framework of Mauritius regarding various corporate offences that are highly encouraged because of the limited circumstances under which courts may lift the corporate veil. There is a need for specific legislation to be enacted by Parliament to address these specific offences. Inspiration should be drawn from the UK’s robust legislative framework on the matter. Originality/value Literature on the subject in Mauritius deals mostly with factual information on the doctrine of separate legal personality and the various exceptions under which the veil of incorporation may be lifted. However, there is a scarcity of research on the various fraudulent activities and their implications on the company that go unnoticed and unpunished because of loopholes in the legal framework. This paper attempts to fill this important gap.

Wage Demands and Fair Working Conditions of Seafarers on Cargo Ships Under a Flag of Convenience: Establishment of a Place of Jurisdiction in Switzerland

This article addresses the question of whether seafarers, regardless of the ordinary international jurisdictions in the country of ship registration or at the domicile of their employer, have a jurisdiction in Switzerland at their disposal to be able to enforce their rights effectively. The significance of maritime trade routes cannot be overstated, and demand continues to be strong. At the same time, many seafarers suffer from precarious working conditions, being often unable to enforce their wage demands and other claims. A key problem is the registration of vessels in flag of convenience (FOC) states which generally lack an effective judicial system or where access to justice may be constrained. Many shipping companies that profit greatly from maritime transport are domiciled in Switzerland, allowing the conclusion that jurisdiction in Switzerland can be established by piercing the corporate veil or, subsidiarily, asserting jurisdiction by necessity. Reasons that justify the registration in an FOC state are hardly apparent and the liability of a benefiting Swiss group company and thus a place of jurisdiction in Switzerland can well be justified. In any case, Switzerland has enshrined the jurisdiction by necessity in positive law and a too restrictive handling by Swiss courts could violate the human right of free access to justice.

The Existence of Individual Companies As Legal Entities In Micro and Small Enterprises In Indonesia: A Review of The Problems of The Alter Ego Doctrine

The enactment of the Job Creation Law affects the provisions of Limited Liability Companies. The mechanism for establishing an Individual Company which is explained implicitly in the Company Law and the Job Creation Law raises issues related to the process of organ responsibility in an Individual Company which states that directors can concurrently hold positions as shareholders and vice versa. One of the problems of the presence of Individual Companies in MSEs in Indonesia is the birth of Alter Ego conditions. The solution to limit the unlimited liability of corporate organs is that the government needs to strengthen and reinforce the doctrine of Piercing the Corporate Veil for Individual Companies and provide legal certainty regarding the regulation of corporate organs in the Company Law and Government Regulation No. 8 of 2021. This article examines the existence of individual companies in the context of micro and small businesses in Indonesia. The focus of the analysis lies on the concept of the alter ego doctrine which often becomes a problem in business practice. This research utilizes a document analysis approach and literature study to explore the legal and practical implications of the alter ego doctrine on individual companies in Indonesia. The analysis shows that the alter ego doctrine has a significant impact on the personal liability of micro and small business owners. The implications of these findings are discussed in the context of business regulation and legal protection for micro and small business owners in Indonesia.

Multinational Enterprises and Human Rights Protection

Multinational enterprises are playing an important role in economic globalisation. Meanwhile, it is common for multinational enterprises to violate human rights overseas while it is difficult for victims to seek remedies. The international law which can regulate human rights violations by multinational corporations are mostly soft laws, but there is a lack of guarantees for the implementation of soft law. In domestic law, most host countries are developing countries that cannot regulate multinational enterprises effectively. And home states lack the will to regulate multinational enterprises because their interests are so closely linked. There are also obstacles like the exercise of jurisdiction and the corporate veil which prevent the multinational enterprises responsible for human rights overseas. Therefore, this essay clarifies the extraterritorial jurisdiction, the non-harm principle and the human rights due diligence to support the responsibility of multinational enterprises. Eventually, this essay clarifies that it is necessary to narrow the gap between the ideal of hard law and the reality of soft law in international law. In the meantime, host states and home states should both strengthen the legislation of human rights due diligence and protection for high-risk industries. Harmonious interaction and co-development of international and domestic law should also be considered and the non-governmental organisation should issue guidelines, and strengthen the regulatory role.

Parent-Subsidiary Responsibility in the Development of Multinational Enterprises

As a core subject in the current international market economic activities, the parent-subsidiary company not only plays an important role in the development of multinational enterprises themselves, but also plays an important role in the bonding of cooperation between countries. However, the limitations of the traditional corporate law governance model, especially the limited nature of liability, make multinational corporations in the actual operation of many problems. Among them, the issue of responsibility sharing between parent and subsidiary companies is still one of the core issues that need to be continuously focused on at this stage, because the assumption of responsibility by parent and subsidiary companies not only has an important impact on the development of the international market economy, but also pays direct attention to the acquisition of creditor's interests. Through comparative research, historical research, and other research methods, the issue of responsibility-sharing among parent-subsidiary companies of multinational enterprises will be studied. The role of the corporate veil piercing system in responsibility-sharing will be analyzed based on domestic and foreign legislation and judicial experience. The aim is to identify a responsibility-sharing approach that promotes the development of multinational enterprises while safeguarding the interests of creditors.

Judicial Review of the Application of Corporate Legal Veil in Malaysia and Indonesia: A Legal Comparison

This study aims to find a comparison of the Legal Corporate Veil between Malaysia and Indonesia. This research is a normative legal research as a literature review. It is found that in corporate law both in Malaysia and Indonesia there is a principle of limited liability between shareholders and company directors known as Separate Legal Entity. This principle essentially asserts that a person's responsibility in a company is limited to their responsibility within the company and does not extend to personal liability. In Malaysia, this regulation is governed by Section 20 of the Companies Act 2016. Meanwhile, in Indonesia, this principle is scattered in the provisions of the Limited Liability Company Act (UU PT) applicable to shareholders, directors, and commissioners. However, this principle may become inapplicable in certain cases, known as Piercing The Corporate Veil. In Malaysia, this is regulated under the Companies Act 2016 as well as several judicial decisions. In Indonesia, this principle becomes inapplicable if shareholders act in bad faith by using the company for personal gain and are involved in legal actions undertaken by the Company. One form of protection from personal liability for Directors and Commissioners is implemented based on the Business Judgement Rule principle. Personal liability does not apply if Directors and Commissioners can prove that the company's loss is not due to their negligence, they have acted in good faith, have no conflict of interest, and have taken action to prevent losses. In this study, there is also corporate responsibility outside the existing Limited Liability Company Law based on business and economic developments decided by The Constitutional Court.

Piercing the corporate veil system and creditors protection: Based on the investigation of debt paying ability--Empirical evidence from the 2005 Company Law amendment.

This paper uses the difference-in-differences model to research how the "piercing the corporate veil" system marked by the 2005 Company Law amendment affects the level of corporate creditor protection. The research results show that private enterprises and local state-owned enterprises are sensitive and significant to this legal amendment. In contrast, local state-owned enterprises are more sensitive and have a stronger motivation to protect the interests of creditors. The motivation of companies with weaker profitability for creditor protection lasts not only for the year of law revision but also extends to the year of implementation. With the law's implementation, the growth effect of creditor protection for local state-owned enterprises has become more significant. Further analysis shows that the main findings of this article are more significant in companies with larger debt scales, companies with a higher year-on-year growth rate of operating income, companies with controlling shareholders, and companies with higher stock market capitalization. From an empirical research view, this paper explains the economic effect and mechanism of the whole corporate personality under the complete system and adds economic evidence for how the law acts on the capital market.

COMPARISON OF THE IMPOSITION OF THE DOCTRINE OF PIERCING THE CORPORATE VEIL IN A LIMITED LIABILITY COMPANY BETWEEN THE BOARD OF DIRECTORS AND SHAREHOLDERS IN TERMS OF LAW NUMBER 40 OF 2007 CONCERNING LIMITED LIABILITY COMPANY

<em>The purpose of writing this journal is to determine the comparison of the imposition of the doctrine of piercing the corporate veil in a Limited Liability Company between the Board of Directors and shareholders, with a review of Law Number 40 of 2007 concerning Limited Liability Companies (UUPT). The Doctrine of Piercing the Corporate Veil is a doctrine that has long been present in the business world, especially attached to the legal entity of Limited Liability Companies in Indonesia. UUPT as the law governing Limited Liability Companies in Indonesia has set out the rules regarding the doctrine of piercing the corporate veil. The doctrine has historically been widely used in court decisions, the presence of the doctrine of piercing the corporate veil can penetrate the distinctive nature of a Limited Liability Company, namely limited liability. Departing from this inevitability, the author then formulates the problem in writing this journal, namely why there is a doctrine of piercing the corporate veil in a Limited Liability Company and how the comparison of the imposition of the doctrine of Piercing the Corporate Veil in a Limited Liability Company between the Board of Directors and shareholders is reviewed from the Company Law. The research method used is normative legal research, based on sources obtained through literature studies, in the form of primary, secondary, and tertiary legal materials related to the writing of this journal. This research shows that the presence of the doctrine of piercing the corporate veil in a Limited Liability Company is needed as a form of legal protection for the Limited Liability Company entity and its related parties, and there are differences in the imposition of the doctrine on the Board of Directors of the company and the company's shareholders. The difference in the imposition between the Board of Directors and the shareholders of the company is that, if the Board of Directors is required another article in relation to its good faith in running the company (fiduciary duty), while the shareholders of the company are expressly regulated in Article 3 of the Company Law.</em>

Application of piercing the corporate veil in investment law

In terms of addressing Piercing the Corporate Veil, it’s a law principle that relates to Limited Liability Companies. One of Limited Liability Companies characteristics is a capability to disregard limited liability for the company’s organs, allowing the organs to be personally liable for wrongful acts that harm the company and other. Knowing this concept is important due to the dynamism of business law and investment law, where the company’s organs often engage in actions solely for personal benefit. This is intriguing due to company’s organs cannot be held personally accountable for corporate actions since the company and it’s organs are separate legal entities. Through normative legal research and a legal and conceptual approach, namely the doctrine of Piercing the Corporate Veil, it’s application to the company’s in investment law will be discussed

Piercing the corporate veil—the trust connection

Abstract The principle of separate legal entity which forms the basic foundation of company law provides for the company as a separate legal entity. This results in the formation of a veil, so to say, that protects the liability of the directors or other related companies from incurring liability. Under the Doctrine of Piercing the Corporate Veil, the said veil can be disregarded in certain circumstances. Historically, this principle has been restricted to companies incorporated under statute. However, recently, a High Court of India applied the doctrine to a Charitable Trust which is a non-corporate body. With Courts of India not providing any contours or sound reasoning towards the extension of the doctrine to non-corporate bodies, this article examines the application of the doctrine on charitable trusts, the flaws and problems that arise from such application and the possible solutions for the same while tracing evolved and developing jurisprudence surrounding the doctrine in taxation cases and trusts.

Disregarding the Corporate Veil in American Procedural Law

Disregarding the Corporate Veil in American Procedural Law

Vedanta and Okpabi: A Step Forward in Corporate Group Accountability?

This paper examines the evolving landscape of corporate group accountability, with a focus on recent pivotal judgments by the UK Supreme Court in Vedanta v. Lungowe and Okpabi v. Shell. These landmark cases have highlighted the potential for parent companies to be held liable for the actions of their overseas subsidiaries, based on the duty of care under tort law. The paper delves into the broader implications of these decisions, including their significance in piercing the transnational corporate veil and their unintended consequences. It also explores the debate surrounding whether these rulings encourage or deter multinational corporations (MNCs) from disclosing corporate-wide policies and conducting human rights due diligence in their subsidiaries, impacting corporate social responsibility and international standards. The paper concludes by offering insights into potential solutions to address the complex issue of the ‘perverse incentive’ created by Vedanta and Okpabi. duty of care, corporate group accountability, transnational corporate veil, parental corporate liability, Shell, Vedanta

Disregarding the Corporate Veil in American Procedural Law

Disregarding the Corporate Veil in American Procedural Law

Research on Corporate Human Rights Due Diligence Duty of Care in the Global Supply Chains

The U.N. Guiding Principles on Business and Human Rights pointed out that businesses should undertake human rights protection obligations, which often needs to be carried out by the way of civil liability. This paper will take the judicial practice of the U.K. and the Netherlands as examples to reveal the legitimacy of the parent company's duty of care to its subsidiaries under the premise of not applying the system of “piercing the corporate veil” from the perspective of comparative law. The duty of care not only refers to the relevant obligation of parent company and its subsidiary, but also means the same thing of companies in the whole supply chain, the phenomenon reflects a trend that the subjects of duty of care has expanded. On this basis, Article 1165 in the Civil Code of the People's Republic of China could be reinterpreted, demonstrating justificatory basis of the enterprise's duty of care.

CONTRADICTIONS IN THE LEGAL STATUS OF STATE-OWNED ENTERPRISE (BUMN) SUBSIDIARIES IN THE PARENT HOLDING COMPANY

The creation of a cluster-based holding company in a State-Owned Enterprise (BUMN) related to core business fields requires careful attention and precise implementation. One must be cautious because issues regarding legal procedures and the legal status of BUMN can still arise. This writing discusses the legal relationship between BUMN Persero and its subsidiaries based on the theory and doctrine of limited liability companies, as well as the contradictory legal status of BUMN subsidiaries within the parent holding company. The research method used in this writing is normative legal research. The findings demonstrate that the piercing the corporate veil doctrine can be employed in terms of evidence, where control of subsidiaries must be exercised by the holding company. Legal responsibility is applicable not only to companies, but also to shareholders as specified in Article 3 paragraph (2) of Law Number 40 of 2007 on Limited Liability Companies (UUPT). Once BUMNs become subsidiaries in a holding company, their status as BUMNs, whether BUMN Perum or Persero, changes since their shares are now sourced from the holding company instead of the state. Therefore, BUMNs that become subsidiaries no longer possess legal standing or status as BUMNs, and the state assumes authority over aspects of control concerning BUMNs that have become subsidiaries of the holding company. This authority is indirectly held by the state via the parent/holding company, which represents the government in terms of share ownership, with the majority of shares originating from subsidiaries.

Принцип самостоятельной ответственности юридического лица при несостоятельности (банкротстве): общие правила и исключения

Introduction. The paper discusses the controversial issues of implementing the principle of independent civil liability for a legal entity, which contributes to maintaining the stability of civil turnover and protecting the rights of creditors in the bankruptcy case of a legal entity. The main positions of the researchers in the context of the problem under consideration, as well as the provisions of the key normative legal acts, are investigated. Special attention is paid to the problem of the absolutization of the principle of independent civil liability of a legal entity in a bankruptcy case. The concept of “piercing corporate veil” in the context of the principles of insolvency (bankruptcy) of legal entities in connection with the problems of holding entities is analyzed. Methods. The study used such general scientific methods of scientific cognition as analysis, synthesis, induction, deduction, etc., as well as specific scientific legal methods, namely, formal legal, the method of legal interpretation, etc. Results. Based on the analysis of the legislation, doctrinal sources, and law enforcement practice, the point of view on the refutable nature of the presumption of attribution of persons specified in the law to persons controlling the debtor is substantiated. The exceptions to the general rules applied in practice in the implementation of the principle of independent liability of a legal entity in insolvency (bankruptcy) are revealed. The specifics of the implementation of special principles in the bankruptcy case of a legal entity are substantiated. Conclusions. Based on the results of the study, the role of both general legal principles and special principles of insolvency (bankruptcy) is determined when law enforcement agencies identify the relationship between legal entities, including at the pre-bankruptcy stage and during the implementation of other bankruptcy procedures.

A Critical Review of Recent Supreme Court Decisions on Piercing the Corporate Veil

A Critical Review of Recent Supreme Court Decisions on Piercing the Corporate Veil