A shareholder who buys shares in a Company does not buy any interest in the Company which is an independent juristic person

It is settled law that shareholders have no right in the property of the Company.

The corporate veil cannot be lifted unless a compelling case is made out by the Plaintiffs, since the doctrine stands as an exception to the principle that a company is a legal entity separate and distinct from its shareholders. This doctrine should be applied in a restrictive manner and only in scenarios wherein it is evident that the Company was a mere camouflage or sham deliberately created by persons exercising control over the Companies to evade liability. Merely because the Directors and Shareholders of two companies are common,it does not make them one and the same. The application would depend on the facts and circumstances of each case and should be used sparingly only in appropriate cases where the circumstances and facts so warrant.

Categories: Corporate

Tagged as: