The veil of incorporation
As you may know, many businesses incorporate – which means they are formed as a limited company. The are various types of company, but by far the most common is a private company. One of the key advantages of a company is that it is a separate legal entity, meaning it can sue and be sued in its own right. This means that individual shareholders and managers are protected in some ways and need not always bear the risks associated with the business.
However, you may also have heard the phrase “lifting the veil of incorporation”. Let me give you a recent example from personal experience. Where I live, a new residential development is proposed, and like all developments, it must go through a planning process with the local council. While looking at the development files, I noticed that the builder was a company and the designing architect another company. By coincidence, I noticed that the two companies were owned by the same person. This, as you can imagine, creates a bit of a problem in my mind. Then the owner of these two companies as a person submitted a document favourable to the proposed development. So, in eyes of the law, this is three people/bodies, but if we lift the veil of incorporation, we can see it is all the same people behind the entities.