distinction between the company and its members

The two are considered as separate legal entities and, thus,'a veil-a line of demarcation--exists between the two. This reality stems from the
characteristics of separate entity of a company, also recognised in the famous case of Salomon vs. Salomon and Co. Ltd. Due to separate entity, the
shareholders can enter into valid contract with the company, they can carryon business in competition with the company, etc. Similarly, the property of the


company is not the joint property of its shareholders. They do not have any insurable interest in it. Further, one cannot be held liable for the acts of another.
The term 'lifting of Corporate Veil' means ignoring the separate legal entity ofthe company, and looking into the realities. It is an important doctrine in the
company law according to which in certain circumstances, the separate legal entity of the company is not taken into account, and the company and its
members are treated as one person.
In other words, sometimes, it becomes necessary to find out the real persons who control the company e.g. in cases when this corporate personality
(legal entity) of the company is misused for fraudulent or improper conduct or for doing things against public policy. In such cases, the court ignores the
principle of separate entity. In other w('Irds. the corporate veil of the company is probed into and lifted up. Tllis, however, is the discretionary power of the
court, and wiII depend upon the underlying social, economic and moral factors as they operate in and through the company.