Gencor ACP Ltd v Dalby [2000] 2 BCLC 734 is a UK company law case concerning piercing the corporate veil

Piercing the corporate veil

Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it...

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Facts

Mr Dalby was a director of the ACP group of companies, including Gencor ACP Ltd. He dishonestly diverted assets and opportunities to his British Virgin Islands

British Virgin Islands

The Virgin Islands, often called the British Virgin Islands , is a British overseas territory and overseas territory of the European Union, located in the Caribbean to the east of Puerto Rico. The islands make up part of the Virgin Islands archipelago, the remaining islands constituting the U.S...

 company. Gencor ACP Ltd claimed that he and the company repay the money. He also paid his son £24,000 a year for work, even though his son was still in school.

Judgment

Rimer J held that Mr Dalby and the offshore company was ordered to disgorge the benefits. Mr Dalby could only have escaped liability if he had obtained the consent of ACP's shareholders for his actions. Both Mr Dalby and his Virgin Islands company were liable to account to ACP for the diverted money and lifting the corporate veil on the Virgin Islands company was appropriate since it was directly controlled by Mr Dalby and in reality functioned as his offshore bank

Offshore bank

An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include:...

account.

The payment to Mr Dalby's son was invalid because it was an unauthorised salary increase in effect for Mr Dalby and had been made to reduce his tax liability.