Veil Piercing - A Necessary evil? A critical study on the doctrines of limited liability and piercing the corporate veil

Cohen, Jacqui

Veil Piercing - A Necessary evil? A critical study on the doctrines of limited liability and piercing the corporate veil

Master Thesis

2014-07-30

Publisher

University of Cape Town

Department

Department of Commercial Law

Faculty

Faculty of Law

Abstract

This paper will focus on the limited liability of the company and one of the important exceptions to this rule: piercing the corporate veil. This paper reveals, after a detailed analysis, that the doctrine of piercing the corporate veil is inherently flawed. While accepting the necessity for such a doctrine in the context of a global market, this paper shows that its application in many jurisdictions, including South Africa, has proved to be problematic. The question that arises for consideration is whether the difficulties associated with piercing the corporate veil outweigh the obvious benefits of its existence. Put another way, does the doctrine, with all of its flaws, bring about sufficient benefits to justify its maintenance within the South African legal system, or are there in fact other remedies to assist those seeking to hold directors and members liable for the conduct of the company? This paper addresses these issues, and ultimately seeks to assess the prospects of the doctrine in respect of its permanence within the South African legal system.

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