Controversy of the ‘Piercing the Corporate Veil’ Institute in Limited Companies in the Company Law
Controversy of the ‘Piercing the Corporate Veil’ Institute in Limited Companies in the Company Law

Summary/Abstract: In theoretical, legislative and practical legal terms, „lifting the veil“ or „piercing the corporate veil“ is a very controversial institute of company law. From the legal point of view, its controversy is already manifested in the very core of this institute, which leads to a kind of expansion in terms of liability of members of limited companies, or more precisely, to increase the scope of their liability from limited to unlimited. The comparative company law regulations of this institute show different approaches, from those that fully recognize its importance and existence to those that completely deny it. It is noticeable that the legal attention paid to this institute largely depends on the level of development of the countries whose legislation regulates the subject matter. Thus, states with a high level of legal security and culture do not know the institute of „piercing the corporate veil“ in the legislative sense, but most often shape its “regulation” through court decisions based on appropriate court precedents and practice, or seek support in proven relevant legal theories or they manifest it indirectly through the application of appropriate civil law institutes such as torts. However, in contrast, countries whose company regulations are not at such an enviable level, as is the case with the Republika Srpska, show a certain commitment to legalizing this institute through a general definition, ie a combination of general formula and characteristic practical cases. However, the Republic of Srpska judiciary shows a certain skepticism and conservatism in the application of this institute, which it expresses by placing unjustifiably high evidence burdens on the prosecutor (creditor of the limited company), which results in difficult proof of fulfilling the conditions of its application. Guided by the above delicate and complex issues, we decided to engage in a deeper analysis of the institute of „piercing the corporate veil“, in the hope that certain author’s observations, suggestions and views in this scientific work will serve as an instrument for clarifying complex issues whose source we find in the subject institute.

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