Piercing the corporate veil in stock corporations

In accordance with the principle of limited liability valid in capital companies, it is not possible to apply to partners for the debts of the company. Limited liability is an important privilege granted to shareholders of capital companies in order to encourage investment. But, as with every right, this right must be used in accordance with the rule of honesty. If limited liability is abused with the intention of harming creditors, the legal order should not allow this. As a matter of fact, in order to prevent such abuses, the institution of lifting the veil of legal entity has been developed with the contribution of doctrine and judicial practice, and it has been accepted that in cases where the legal entity is abused, the limited liability principle can be ignored and the partners can be held responsible for the company's debts. One of the undisputed situations in which the legal entity veil can be lifted is the mixing of assets. If the assets of the company and the assets of the partners are mixed in such a way that it is not clear who they belong to, lifting the veil of legal entity may come to the fore. Although it is accepted in German law that the legal entity veil can be lifted due to the mixing of assets, it is accepted that the company cannot be applied for the debt of the partner, no matter how high the amount involved. In our opinion, the important issue in case the veil of legal entity is lifted is the misuse of legal entity in order to smuggle goods from creditors. If this fact is proven, the reverse method of lifting the legal entity veil should also be resorted to. Especially in one-person companies, if the partner has transferred her assets to the company in order to evade assets from her personal creditors, the company should be able to apply for the partner's debt.