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  • Piercing The Veil of Corporate Entity

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    Kath
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    The document discusses three types of cases where a court may disregard the separate legal status of a corporation: 1. Defeat public convenience cases - Where the corporate fiction is used to evade an existing obligation. Clear and convincing evidence is required. 2. Fraud cases - The corporate entity must be purposely used as a shield to defraud creditors or perpetrate wrong. 3. Alter Ego cases - A three-pronged test is used to determine if one party controls the corporation to such a degree that they have no separate existence and this control was used to commit fraud or wrongdoing that caused harm.

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    Piercing the veil of corporate entity

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    The document discusses three types of cases where a court may disregard the separate legal status of a corporation: 1. Defeat public convenience cases - Where the corporate fiction is used to evade an existing obligation. Clear and convincing evidence is required. 2. Fraud cases - The corporate entity must be purposely used as a shield to defraud creditors or perpetrate wrong. 3. Alter Ego cases - A three-pronged test is used to determine if one party controls the corporation to such a degree that they have no separate existence and this control was used to commit fraud or wrongdoing that caused harm.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    8 views1 page

    Piercing The Veil of Corporate Entity

    Uploaded by

    Kath
    The document discusses three types of cases where a court may disregard the separate legal status of a corporation: 1. Defeat public convenience cases - Where the corporate fiction is used to evade an existing obligation. Clear and convincing evidence is required. 2. Fraud cases - The corporate entity must be purposely used as a shield to defraud creditors or perpetrate wrong. 3. Alter Ego cases - A three-pronged test is used to determine if one party controls the corporation to such a degree that they have no separate existence and this control was used to commit fraud or wrongdoing that caused harm.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Defeat public convenience Fraud cases Alter Ego cases

    Evidence Clear and convincing evidence.


    needed
    Test employed When the corporate fiction is Veil-piercing in fraud cases requires that theThree-pronged test:
    to determine used as a vehicle for the evasion legal fiction of separate juridical personality is
    a. Instrumentality or Control test -
    existence of an existing obligation. used for fraudulent or wrongful ends. control, not mere majority or
    complete stock control, but complete
    There must be a showing that the corporate domination, not only of finances but
    entity was purposely used as a shield to of policy and business practice in
    defraud creditors and third persons of their respect to the transaction attacked
    rights, or perpetrate wrong, is not enough so that the corporate entity as to this
    justification for disregarding their separate transaction had at the time no
    personalities. separate mind, will or existence of its
    own
    b. Fraud test - such control must have
    been used by the defendant to
    commit fraud or wrong, to perpetuate
    the violation of a statutory or other
    positive legal duty, or dishonest and
    unjust act in contravention of
    plaintiff’s legal right; and
    c. Harm test - the aforesaid control
    and breach of duty must [have]
    proximately caused the injury or
    unjust loss complained of.

    All three elements should concur to warrant


    the piercing of the veil of corporate fiction.

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