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In this case, Mr Salomon was the major shareholder, a director, an employee and a creditor of the company he created.

It is quite common in Ireland for one person to have such a variety of roles and still be a different legal entity from the company. Lee formed his crop spraying business into a limited company in which he was director, shareholder and employee. Lee was self-employed and thus not covered by the legislation. Lee and the company he had formed were separate entities, and it was possible for Mr. The following case is similar to Salomon and Lee, but the principle of separate personality worked to the disadvantage of the plaintiff.

In a sole proprietorship or partnership, the owners personally liable.

For all intents and purposes, all acts taken by these two company types are taken by the owners themselves.

When he was killed in a flying accident, his widow sought social welfare compensation from the State, arguing that Mr. The defendant company was involved in legal proceedings but did not have enough money for legal representation.

The plaintiff, who was the major shareholder and managing director of the company, sought to conduct the company’s defence.

The court held that the income-tax authorities were entitled to pierce the veil of corporate entity and to look at the reality of the transaction to examine whether the corporate entity was being used for tax evasion.

In this case, a separate corporate entity was brought into existence outside the taxable territory with the ulterior motive of evading the tax obligation by the assessee mills.

But in certain exceptional cases the Court is entitled to lift the veil of corporate entity and to pay regard to the economic realities behind the legal facade. 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