N. K. Gupta posted an Question
July 05, 2021 • 07:36 am 30 points
  • Commerce

Diffrence between corporate veil and ultra veil

diffrence between corporate veil and ultra veil in simple words

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  • Sapare bhavani bai Best Answer

    Company enjoys a separate position from that of position of it’s owners. It is artificial but yet a person in eyes of law. Problems arise when this position of the company is misused. It is not incorrect to say that, though the company is an unreal person, but still it cannot act on it’s own. There has to be some human agency involved so that company is able to perform it’s functions. When this human agency is working, in the name of the company, for achieving goals approved by law, the social order is not disturbed. But when this medium of operations begins to be tainted, conflicts arise. This authority rather becomes firing of bullets from someone else’s gun. When directors, or whosoever be in charge of the company, start committing frauds, or illegal activities, or even activities outside purview of the objective/articles of the company, principle of lifting the corporate veil is initiated. It is disregarding the corporate personality of a company, in order to look behind the scenes, to determine who the real culprit of the committed offence is. Thus, wherever this personality of the company is employed for thepurpose of committing illegality or for defrauding others, Courts have authority to ignore the corporate character and look at the reality behind the corporate veil in order to ensure justice is served. Doctrine of Ultra Vires A Memorandum of Association of a company is a basic charter of the company. It is a binding document which describes the scope of the company among other things. If a company departs from its MOA such an act is ultra vires.


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