Corporate Veil Piercing under Company Law: Judicial Trends and Legal Implications in Bangladesh

Abstract

As Bangladesh’s corporate landscape rapidly expands, the judiciary faces a critical dilemma: balancing the foundational doctrine of separate corporate personality with the necessity of piercing the corporate veil to prevent fraud and protect creditors. This dissertation argues that the current application of corporate veil piercing in Bangladesh lacks consistency, creating legal ambiguity that compromises corporate accountability and investor confidence. The thesis is categorized into eight chapters and synthesizes doctrinal legal analysis with empirical data collected from statutory frameworks, corporate policy documents, and judicial reports. This work represents a mixed-method approach, combining normative case analysis with empirical data collected from a quantitative survey of 120 respondents including corporate lawyers, company secretaries, and bank recovery officers, alongside a critical review of national case law. The study synthesizes the classic common law theory established in Salomon v. Salomon with contemporary empirical legal scholarship regarding limited liability abuse and systemic corporate default. The findings uncover a significant judicial application gap. For instance, 82% of respondents believe that Bangladeshi courts do not apply clear, objective criteria when deciding to lift the corporate veil, while 85% perceive the current enforcement mechanism against defaulting directors as ineffective under The Companies Act, 1994. Structural inconsistencies were identified in cases involving banking default and fraudulent trading, leading to the conclusion that Bangladesh must implement justice-based legislative reforms. Applying a more structured and predictable framework to corporate veil piercing can assist in developing a highly transparent, consistent, and morally grounded corporate governance framework in Bangladesh.