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THE DOCTRINE OF PIERCING THE CORPORATE VEIL: ITS LEGAL AND JUDICIAL RECOGNITION IN ETHIOPIA
Endalew Lijalem Enyew ♣

Abstract:
Upon acquisition of legal personality a company enjoys certain attributes such as limited liability. While the separate legal personality of a company enables it to enjoy rights and assume obligations quite different from its members, the limited liability of shareholders refers to the fact that the company alone is liable for its debts. However, such privilege of limited liability may not always exist when the legal personality of a company is abused and used for illegitimate or unlawful purposes and other reasons. This article examines some of the grounds by which the corporate veil can be pierced under Ethiopian law and the role of courts in recognizing the doctrine. Based on the analysis of the relevant legislative provisions and some court cases, it is found that Ethiopian company law, though not sufficient, provides some clear grounds of piercing the corporate veil and certain possible grounds which may call for the application of the doctrine. It is also argued that Ethiopian courts should apply the doctrine of piercing the corporate veil, through the purposive interpretation of the statutory provisions, if doing so produces equitable results and fairness.

Key Words:
Company, corporate veil, piercing the veil, Ethiopia DOI http://dx.doi.org/10.4314/mlr.v6i1.3

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Introduction
The separate legal personality of a company renders it a juridical person distinct from its shareholders. The other attribute of a company is limited liability of share holders in which the company will alone be liable for the debts it incurs. That is, if the company becomes unable to pay its debts, the members of that



LL.B (Hawassa University), LL.M (Addis Ababa University); and currently studying MPhil in Peace and Conflict

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