Piercing the corporate veil, also called "veil piercing," is a doctrine by which courts will sometimes disregard a corporation as an entity separate from one or more of its shareholders. Veil piercing allows creditors of a corporation that does not have enough assets to pay its debts to reach the personal assets of one or more shareholders of the corporation.
In general, courts are reluctant to pierce the corporate veil because the principle of limited liability is a fundamental aspect of the corporate form. In appropriate cases, however, where the corporation is a "mere instrumentality" or "alter ego" of the shareholder, courts will pierce the corporate veil in the interests of justice.
The doctrine of piercing the corporate veil should be distinguished from the related doctrine of reverse piercing the corporate veil, in which a creditor of the shareholder is typically attempting to reach the assets of the corporation, rather than a creditor of the corporation trying to reach the assets of the shareholder, as in regular piercing.