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Members of close corporations are well advised to take note of the judgment in Airport Cold Storage (Pty) Ltd v Ebrahim and Others 2008 (2) SA 303 (C). On the facts, the Court had no difficulty in issuing an order declaring the members of the close corporation personally liable for the corporation’s debts. In coming to its conclusion, the Court observed that veil piercing will not be resorted to as a matter of course, but a Court will not hesitate to do so where it
appears that the company or close corporation was a mere front concealing the true facts. It is not a requirement to establish that the corporation had been operating fraudulently.

The Court’s message is clear: carrying on business in the form of a company or close corporation is not simply a tool of convenience to be used by shareholders or members to shield themselves from the entity’s creditors when it suits them, while at the same time paying scant attention to the principle of corporate governance and the relevant statutory provisions.