What was the decision in Prest v petrodel?
The Supreme Court unanimously overturned the Court of Appeal and held that Mr Prest beneficially owned the assets of the Petrodel Resources Ltd companies under a resulting trust because he contributed to their purchase price.
Why is Prest v petrodel significant?
In Prest v Petrodel [2013] UKSC 34 the English Supreme Court undertook a review of the principles of English law which determine in what circumstances, if any, a court may set aside the separate legal personality of a company from its members and attribute to its members the legal consequences of the company’s acts.
What is the concealment principle in Prest v petrodel?
The concealment principle is simply that the court will look behind a company to see who the real actors are. The evasion principle is where a company is interposed for the purpose of defeating or frustrating a legal right.
What are three common grounds for piercing the corporate veil?
Fraud, owner domination of management and operations, and commingling of funds have the strongest and most predictive relationship with piercing the corporate veil.
When can the corporate veil be pierced Prest?
The veil can be pierced only for the purpose of depriving the company or its controller of the advantage they would otherwise have obtained by the company’s separate legal personality: Prest v Petrodel Resources Limited & Others [2013] UKSC 34.
What is the purpose of corporate veil?
According to the Business Dictionary , the corporate veil is “a legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company’s debts and other obligations. This protection is not ironclad or impenetrable.”
When can the corporate veil be pierced?
the corporate veil can only be pierced when there is impropriety. impropriety “must be linked to use of the company structure to avoid or conceal liability” it is necessary to show both control of the company by the wrongdoer and impropriety.
What is the evasion principle in Prest?
The “evasion principle”, which is when a person is under an existing legal obligation or liability, or subject to an existing legal restriction, which they deliberately evade or whose enforcement they deliberately frustrate by interposing a company under their control.
When can you pierce the corporate veil UK?
The corporate veil can only be pierced if there is some “impropriety.” The court cannot pierce the corporate veil just because the company is involved in some impropriety. The impropriety must be linked to the use of the company structure to avoid or conceal liability.
What is a corporate veil law?
The “corporate veil” metaphorically symbolises the distinction between the company as a separate legal entity and the shareholders who own the shares in the company.
What is the case of Prest v Petrodel Resources Ltd?
Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law.
Is there a doctrine of lifting the corporate veil?
In the case of VTB Capital, this doctrine was called into question by the courts as the English lawyers were not fond of lifting the corporate veil. However, the existence of the doctrine was confirmed in the case of Prest and it provided with the rationale behind lifting the corporate veil.
Can the corporate veil be pierced?
Prest therefore established that although it is possible that the corporate veil may be pierced in some circumstances, it is not clear what these circumstances are beyond the fact that the remedy is only a last resort 19 and as such it seems that the decision failed to take advantage of the opportunity to clarify the law.
Does Ben Hashem apply to Petrodel companies?
in the name of the Petrodel companies. It followed, unless the corporate veil that Mr Prest was not. The corporate veil cannot be lifted unless the principles in Ben Hashem apply. The judge accepted that there was no relevant impropriety; therefore Ben Hashem does not apply.