When corporate assets may be taken into account
If you have assets registered in the names of companies rather than your own, the ‘usual rule’ is that these ‘in law, are separate legal entities’.
However, if it’s deemed you’ve deliberately moved them to avoid their being taken into account, be aware ‘in exceptional circumstances the courts can ‘lift (or ‘pierce’) the corporate veil'.So says this interesting ICAEW Legal Alert.
In this case, a husband was thought to have moved ownership of a particular asset in order that it wouldn’t be taken into account in his divorce proceedings.
But the court ‘found that the husband had intentionally taken exceptional steps to put the asset beyond the reach of the English courts and, therefore, his wife’.
He had physically removed the asset, as well as changing its ownership.
‘The asset had been taken to Dubai, and ownership of it had changed several times for no apparent reason other than to avoid it being taken into account in the divorce negotiations.’These were the specifics in this particular case.
But the point’s more general: that ‘corporate veil’ can be lifted by a court if – as the judge ruled in this case – it’s felt to be ‘clearly necessary in the interests of justice’.