Journal of Civil Law Studies


Mariusz Fras


Poland, Austria, Germany, Switzerland, United States, Piercing (lifting) the corporate veil, Disregarding (avoiding) corpo-rate identity, Intrusion beyond the barrier, Capital companies, Sub-sidiary, Parent company, Protection of company creditors, Commercial law


The separation of a company from its members, based on legal personality, is recognized as one of the fundamental principles of corporate law. It expresses the legal distinction between the two entities. A consequence of the separateness principle is that members are not liable for the debts of their companies, and companies cannot be held liable for the debts of their members. However, such consequences of the principle of mutual autonomy of companies and their members are in sharp contrast with commercial reality, in which intertwined corporate groups operate as a single economic entity. In market transactions, a subsidiary often becomes a tool in the hands of its controlling partner—the parent company—trading on its own behalf but in the interest of the parent enterprise or the entire corporate group. Consequently, the subsidiary rather than the controlling company is liable to third parties when harm is caused to them. In such situations, the application of the principle of corporate separateness gives rise to an unjustified privilege to the parent company—the member of the subsidiary—while parties contracting with the subsidiary are at risk. Many legal systems react by mitigating the separateness principle, using devices such as as “piercing (lifting) the corporate veil,” “disregarding (avoiding) corporate identity,” “intrusion beyond the barrier” (Durchgriff) or “de facto management” (gestion de fait). The purpose of this study is to present the terms and preconditions of different veil-piercing liability mechanisms in selected jurisdictions such as Poland, Germany, Switzerland, Austria, Italy, and the United States. The need to analyse the construction of veil-piercing liability in the Italian and Polish legal systems is a consequence of discussion on the methods of protection available to creditors of a limited liability company.

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