veil of incorporation

The veil of incorporation is a legal principle that treats a company as a separate entity from its owners or shareholders. This separation means that the company is responsible for its own debts and legal obligations, not the individuals who own or run it. This protection encourages entrepreneurship by limiting personal liability. However, in certain cases—such as fraud or misuse of the company structure—the courts can "pierce" this veil, holding owners personally accountable. Essentially, it helps maintain a clear boundary between a company's legal identity and that of its owners, promoting stability and confidence in business operations.