Piercing the Corporate Veil

Piercing the corporate veil refers to a legal concept where courts disregard the separation between a corporation and its owners or shareholders. This typically occurs when the corporation is misused, such as in cases of fraud, wrongful behavior, or when the company is merely an alter ego of its owners. When the veil is pierced, creditors can hold the owners personally liable for the corporation's debts or obligations. This principle helps prevent misuse of the corporate structure to shield individuals from accountability and maintains fairness in business dealings.