The company is a separate legal entity which confers its own rights and duties. The members of the company have limited liability in the normal course of business but can be held liable in extraordinary circumstances where the court feels that there is a misuse of the Principle.

This is a landmark case law where the corporate veil was lifted to make the actual person behind the sham companies liable for a super-tax on an aggregated income. It was an instance of the sham transfer, even though the transaction ends with the formal registration of the document before the Registrar.