What does Corporate Veil do?

 The corporate veil is a legal concept which separates the actions of an

organization to the actions of the shareholder.
 it protects the shareholders from being liable for the company’s
actions.
 In this case a court can also determine whether they hold shareholders
responsible for a company’s actions or not.
 the term of ‘Piercing the corporate veil’ which refers to a circumstance
where courts set aside the limited liability of the shareholders and hold
a company’s investors or directors personally liable for the
organization’s fraudulent activities or failure in debts.
 Laws vary from state to state, but courts will generally abstain from
piercing the corporate veil unless there have been signs of serious
misconduct.
 Piercing the corporate veil takes off the distinction between the owners
and the business, the distinction is stripped away. The owners or the
shareholders working on behalf of the company become personally
responsible for the financial condition of the business, like as they
would be if the company was a sole proprietorship.
 Piercing of the corporate veil generally occurs when someone, like the
creditor or a person who has been affected by a business, takes legal
action. He would argue that the owners of the business should be held
personally liable for the money that is at stake or frauded.
 The court will not easily agree to pierce the corporate veil in any
random situations, since the entire purpose of creating the veil is to
protect owners and allow the business to operate in its own
independence. However, the court will pierce the corporate veil in
situations where the owners, directors or shareholders commit frauds,
fail to follow the corporate formalities or have acted inappropriately.
 The corporate veil is a legalized concept separating the actions of the
organization from that of its shareholders.