ACCA · Question 13 · Syllabus D: The formation and constitution of business organisations
The courts will generally uphold the principle of separate corporate personality. However, the 'corporate veil' may be pierced in certain exceptional circumstances. In which of the following situations is the court most likely to pierce the veil?
Answer options:
Where a company is a wholly-owned subsidiary of another company.
Where the company was formed specifically to evade an existing legal obligation.
Where the company is experiencing temporary cash flow insolvency.
Where a director holds the majority of the voting shares.
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