#Legal Sense

LIFTING THE VEIL OF INCORPORATION

By Funmilayo Olagunju

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Distinct legal personality is one of the incidents of incorporation. A duly registered incorporation is a juristic person known to the Law. Consequently, it can purchase and dispose property in its name, it can sue and be sued in its name.

A Company is an incorporation and ordinarily, it is a different legal personality from the natural persons (human being) who are behind it. In the case of Lasisi v. Registrar of Company (1974) 7 S.C. 73 the Supreme Court describes a company thus:

“a company is an artificial human being and its registration is its birth and certificate of registration is its birth certificate.”

By the provision of Section 42 of the Companies and Allied Matters Act 2020, a company becomes a body corporate by the name contained in its Memorandum of Association with effect from the date of its registration. As a general rule, there is a legal “veil” distinguishing a Company apart from the human being behind it (like the sacred veil of the temple covering the Holy of holies)

There are exceptional cases where the Law would lift the protective veil to see the actual human behind the facade of a company. That is the doctrine of lifting the veil.

In the case of TOPHER ZHANG INVESTMENT LTD. & ANOR v. MASTERS ENERGY OIL & GAS LTD (2023) LPELR-60279(CA), the Court pronounced about the nature of circumstances of lifting the veil:

“…Nevertheless, the doctrine of separate juristic personality of a company is a flexible one. Its elasticity is found in the concept of lifting the veil of incorporation. The concept of lifting the veil of incorporation denotes the judicial act of imposing personal liability on otherwise immune corporate officers, directors or shareholders for the corporation’s wrongful acts. One of the legally recognised instances for lifting the veil of incorporation is when a company is accused or liable for fraud…”

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When a Company is used as a facade to commit fraud or crime, the human behind it shall be unveiled. While a Company cannot serve terms of imprisonment, the human personality behind it can be unveiled to serve the course of justice. Incorporation of a Company is not a license for lawlessness.

“Which hope we have as an anchor of the soul, both sure and steadfast, and which entereth into that within the veil”

Hebrews 6:19 (KJV)

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