Glossary · Business Law
Piercing the Corporate Veil
piercing-the-corporate-veil-7b0636a970d88c58-2026-07-28
- Type
- Glossary
- Jurisdiction
- National
- Date
- 2026-07-28
- Topic
- Business Law
An equitable doctrine allowing courts to disregard a corporation's separate legal existence and hold its owners personally liable for company debts. Courts pierce the veil when owners ignore corporate formalities, commingle funds, undercapitalize the business, or use the entity to perpetrate fraud or injustice. It is an exception to limited liability, applied sparingly and usually against closely held companies.
Definition
An equitable doctrine allowing courts to disregard a corporation's separate legal existence and hold its owners personally liable for company debts. Courts pierce the veil when owners ignore corporate formalities, commingle funds, undercapitalize the business, or use the entity to perpetrate fraud or injustice. It is an exception to limited liability, applied sparingly and usually against closely held companies.
Piercing the Corporate Veil. An equitable doctrine allowing courts to disregard a corporation's separate legal existence and hold its owners personally liable for company debts. Courts pierce the veil when owners ignore corporate formalities, commingle funds, undercapitalize the business, or use the entity to perpetrate fraud or injustice. It is an exception to limited liability, applied sparingly and usually against closely held companies. Example: Because the sole shareholder paid personal bills from the corporate account, the court pierced the veil and held him liable for the judgment.