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Doctrine of 'corporate veil' is most likely to be lifted by a court when:
AThe company adopts a different financial year than its parent
BThe company has only Indian directors
CThe company issues bonus shares
DMembers use the corporate form to perpetrate fraud or evade tax
Answer & Solution
Correct answer: D. Members use the corporate form to perpetrate fraud or evade tax
1. Lifting the veil is a judicial remedy invoked where the corporate form is being misused.
2. Fraud, sham transactions and tax evasion are textbook triggers.
3. Hence (B).
_Source: ICAI BoS CA Inter Paper 2 — Preliminary_