29 Dec



Lord Denning in Littlewoods Mail Order Stores Ltd V IRC noted that “the doctrine in Salomon V Salomon has to be watched very carefully”… “courts can often draw aside the veil… to see what really lies behind”.

Lifting the veil occurs where the courts or law disregard the corporate personality of the company in deserving circumstances. In Adeyemi V Lan and Baker (Nig) Ltd, the court held that there is nothing sacrosanct about the veil of incorporation. The veil shall be lifted to prevent the avoidance of recognition by the eyes of equity.

In Lennards Carrying Co V Asiatic Petroleum, the court noted that a corporation is an abstraction. In Trenco (Nigeria) Ltd V African Real Estate, the court noted that since the company has no mind of its own, it acts through agents. Lord Denning noted in Bolton Engineering Co V Graham and Sons ltd a co can be likened to a human body which has a brain and nerve centre. The brain controls and the hands act. He then stated that; the directors and managers represent the directing mind and their action can be treated as that of the company. See also-Faith Entreprises Ltd V BASF Nigeria Ltd.

We shall discuss the judicial instances and of lifting the veil, then proceed to the Statutory provisions on lifting the veil.


Professor Abugu rightly notes; that “there is no consistent principle”. The veil would be lifted where the justice of the case demands. Examples include.

:: To prevent fraud and improper conduct: Public Finance Securities Ltd V Jefia. In Gilford Motor co Ltd V Horne, the defendant had promised not to solicit after the company’s customers if his appointment (with the company) was terminated. He later formed a company to do the soliciting/seeking. Held: the co was a mere device. In Jones V Lipman, Lipman contracted to sell his land to Jones. He later sought to evade the contract by incorporating a company and conveying the piece of land to the company and said he did not own the land again. Held: company is a mere creature of Mr Lipman. In Wallersteiner V Moir lord Denning frowned upon the use of companies as puppets by the defendant Dr Wallersteiner. In Akinwunmi O. Alade V Alic (Nig) Ltd, court noted that veil must be lifted where there is fraudulent and reckless conduct. In Adedipe V Frameinendur[1] the court held that where a company fails to apply money received for purpose received, the directors would be personally liable in accordance with Section 290 CAMA.

:: To know the identity of those in control of the company: In Diamler Co Ltd V Continental Tyre and Rubber Co (GB) Ltd[2] in determining whether the respondent company was an alien, the court had to look at the nationality of persons in control of the company. In Re F.G Films Ltd, an English company claimed certain tax advantages by virtue of being a British film company. The veil was lifted to discover that the company (though registered in England) was controlled by an American Holding Company. Held they are not essentially English and could not claim the tax advantages.

:: Revenue Purposes: “govament too like moni” therefore, they would do anything necessary to enforce revenue collection and prevent tax evasion. Even if it means lifting the veil of the company. In De Beers Consolidated Mines V Howe, a spotlight was shone on those who have managerial control to decipher the residence of the company for tax purposes. See Re FG Films discussed above. Firestone Tyre and Rubber Co V Llewellin, an English subsidiary was treated as an agent of its American Parent company for the purposes of tax. Also Pan Asian African Co Ltd V National Insurance Corp (Nig) Ltd. Conversely, in Marina Nominees Ltd V Federal Board of Inland Revenue, it was noted that if lifting the veil would result in loss of revenue to the government, then the veil would not be lifted.

:: In cases of Agency: we know that an agent is a person who acts on behalf of another person (his principal) and can bind his principal with third parties. Where a company is acting on behalf of another person (a principal), the court can disregard the issue of separate personality and decide to fish out the principal.

:: Where a company has various subsidiaries, the court may (in deserving circumstances) regard all the subsidiaries and the company as a single economic unitDHN Food Distributors Ltd V Tower Hamlets LBC. In this case, a land was registered in the name of a subsidiary but a parent company carried on business there. When the government compulsorily acquired the land and sought to compensate only the subsidiary, the court (Per) Lord Denning refused and noted that the group should be treated as one concern and the parent should also be compensated. This single economic theory was affirmed in Amalgamated Investment and Property Co Ltd V Texas Commercial International Bank Ltd[3] but was criticised in Woolfson V Strathclyde Regional Council. In a leading case of Adams V Cape Industries Plc[4] the courts refused to apply the single economic unit principle and noted that subsidiaries are not facades. This shows that it all depends on the facts of each case.

:: Other instances where it would be unjust and inequitable not to lift the veil. See Intercontinental Offshore Construction Ltd and Ors V Shoreline Liftboats Nigeria Ltd: Also;  Gilford Motor Co V Horne.


Various statutory provisions may direct the court to lift the veil of incorporation in certain circumstances. They include:

  • Section93_CAMA:If a company carries on business without having at least two membersand does so for more than 6 months, every  director or officer[5] of the company during the time that it so carries on business with only one or no member shall  be liable jointly and severlly with the company for the debts of the company contracted during that period.
  • Section_336(1)_CAMAIf, at the end of a year a company has subsidiaries, the directors shall, as well as preparing individual accounts  for that year, also prepare group financial statements being accounts or statements which deal with the state of  affairs and profit or loss of the company and the subsidiaries. This provision sees the company as a single economic unit for the purpose of preparing financial statements.
  • Section_506(1)CAMA:  If, in the course of the winding up of a company, it appears that any business of the company has been carried  on in a reckless manner or with intent to defraud (creditors of the company or creditors of any other person for any  fraudulent purpose), the court, on the application of the official receiver, or the liquidator or any creditor or  contributory of the company, may, if it thinks proper so to do, declare that any persons who were knowingly  parties to the carrying on of the business in manner aforesaid shall be personally responsible, without any  limitation of liability for all or any of the debts or other liabilities of the company as the court may direct.
  • Section 548(4)[6]. Requires an officer that stamps or signs on behalf of a company to clearly write the company’s name in the (signed or stamped) document else he would be personally liable. Unless the company decides to pay.


[1] (2012) 24 WRN 120 CA.

[2] [1916] 2 A.C 307.

[3] [1982] Q.B 84.

[4] [1990] Ch 433. Adams v Cape industries, Cape Industries plc was a UK company, head of a group. Its subsidiaries mined asbestos in South Africa. They shipped it to Texas, where a marketing subsidiary, NAAC, supplied the asbestos to another company in Texas. The employees of that Texas company, NAAC, became ill, with asbestosis. They sued Cape and its subsidiaries in a Texas court. Cape was joined and argued there was no jurisdiction to hear the case. Judgment was still entered against Cape for breach of a duty of care in negligence to the employees. The tort victims tried to enforce the judgment in the UK courts. The requirement, under conflict of laws rules, was either that Cape had consented to be subject to Texas jurisdiction (which was clearly not the case) or that it was present in the US. The question was whether, through the Texas subsidiary, NAAC, Cape Industries plc was ‘present’ in the US. For that purpose, the claimants had to show in the UK courts that the veil of incorporation could be lifted and the two companies be treated as one. Held that the parent, Cape Industries plc, could not be held to be present in the United States and the U.S judgment awarded against it should not be recognised.

[5] Section 31 of the repealed 1968 Act used “every person who is a member”.

[6] If any officer of a company or any person on its behalf  

(a) uses or authorises the use of any seal purporting to be a seal of the company whereon its name is not so  engraved as aforesaid; or  

(b) issues or authorises the issue of any business letter of the company or any notice, or other official publication  of the company, or signs or authorises to be signed on behalf of the company any bill of exchange, promissory  note, endorsement, cheque or order for money or goods wherein its name is not mentioned in the manner  aforesaid; or  

(c) issues or authorises to be issued any bill or parcel, invoice, receipt, or letter of credit of the company, wherein  its name is not mentioned in manner aforesaid, he shall be guilty of an offence and on conviction liable to a fine of  N500 and shall further be personally liable to the holder of any such bill of exchange, promissory note, cheque, or  order for money or goods, for the amount thereof, unless it is duly paid by the company


Quite eccentric really

Comment (6)

Thank you for your notes. Please some parts in the statutory section are missing


Briefly examine the concept of “lifting up the veil of incorporation and illustrate with specific scenarios that could lead to this


Good and Concise

Esther Ewoh

What are the circumstances which the court lifts the veil of incorporation


I noticed that the statutory requirements for lifting the veil are section from the old CAMA 1990, can this be updated to reflect the provisions in the new CAMA 2020… thanks


That was based on the date of composition.
Kindly update with the new CAMA thought the principles are largely the same.


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