When the Corporate Veil Should Not Be Pierced

The “separate entities” principle established over 100 years ago by the House of Lords in Salomon v. Salomon & Co. is recognized as one of the fundamental principles of English law. Regrettably, in the past couple of decades, a “just and equitable” test has crept into the jurisprudence and been occasionally — but wrongly — applied in determining when to pierce the veil. The result has been uncertainty in the law and a weakening of the principle, which for more than a century has deftly served as a cornerstone of corporate law. Published in the November/December 2009 issue of Canadian Lawyer as part of Bryan Haynes' regular column.