The recognition of a company’s separate juristic personality by the UK’s House of Lords in its landmark ruling in Salomon v. Salomon A Company Ltd., remains the basis for modern corporate law. The ruling in effect drew a corporate veil around the legal personality of the company thereby establishing the separate legal identity of a corporate.
While India also follows the separate juristic personality of corporates as a general principle, exceptions have been incorporated over the years by way of legislative action and juridical pronouncements. In the context of insolvency law, the corporate veil is typically lifted in instances where a group company could be held liable for the debts of its associate and subsidiary companies, or if a group of companies functioned as a collective.
Continue Reading Staggered Lifting of the Corporate Veil: A Case for Group Insolvency Norms