The Realist's Guide to Piercing the Corporate Veil: Lessons from Hong Kong and Singapore

38 Pages Posted: 27 Mar 2009 Last revised: 21 Feb 2012

See all articles by Angelo Capuano

Angelo Capuano

Central Queensland University (CQUniversity) - Business & Law

Date Written: March 1, 2009


Anglo-Australian common law has established a number of tests for when the corporate veil should be pierced to hold directors and companies liable. While these are well established they are largely unhelpful in their practical application. The reliance on formalist legal doctrine over-complicates cases and results in injustice. It is out of touch with the realities of corporate structures and ignores the factual uniqueness of each case. Rather than focusing on the metaphysical, the emphasis should be on the realistic. Realism reveals that distinctions about directors' liability between public and private companies is illusory. In spite of the continuing use of legal tests, analysis of the judicial reasoning reveals realist approaches relating to veil piercing. In particular they can be extracted from the decisions of the courts of Hong Kong and Singapore. They employ the factual matrix guided by general principles, like male fides, to add certainty to veil piercing and to achieve justice as the special facts of each case demand. This overarching equitable discretion should be used, but guided and controlled by general principles that ensure consistency based on the factual matrix and precedent. Three general principles can be identified in veil piercing cases, as extracted from the jurisprudence and the judicial reasoning employed, to give that guidance. These are, where there is (i) control; (ii) an act warranting the piercing of the veil; and, (iii) male fides, that is, no legitimate commercial interests and business purposes for the act, then, the veil should be pierced to hold the controllers liable, irrespective of any artificial legal tests that may allow that person, natural or artificial, to escape liability.

Keywords: Company law, corporations law, corporate veil, realism, American legal realism, male fides, limited liability, economic incentives

JEL Classification: K22

Suggested Citation

Capuano, Angelo, The Realist's Guide to Piercing the Corporate Veil: Lessons from Hong Kong and Singapore (March 1, 2009). Australian Journal of Corporate Law, Vol. 23, No. 1, 2009, Available at SSRN:

Angelo Capuano (Contact Author)

Central Queensland University (CQUniversity) - Business & Law ( email )


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