BY SOPHIE MIRAMBO
A company is a separate legal person, distinct from its directors, shareholders and employees. This principle, known as the corporate veil, individuals from automatically bearing the company’s debts and obligations.
However, courts may lift the corporate veil in exceptional circumstances, particularly where a company is used to perpetrate fraud, conceal assets or evade legal obligations. Where justified, individuals responsible for the misconduct may be held personally protects liable.
Nevertheless, lifting the corporate veil must not be confused with imposing liability on an employee who signs a document on behalf of a company. An employee’s personal liability depends on the document’s terms, the capacity in which it was signed and the applicable law.
Corporate responsibility requires careful examination of the facts. Before holding an employee personally liable, the legal basis for that liability must be established. Employment alone should not make someone a substitute debtor for a company’s obligations.
sophy_mirambo@ yahoo.com +255 685 240 004
