Modern Financial Regulations Have Made ‘Piercing the Corporate Veil’ Easier

Along with the evolution of the market economy a clear separation of the actors involved in a business firm, i.e. owners of the capital and those who specialize in employing the capital for production of goods and services become visible. Accordingly, the directors of a company function as the agents of the corporation, and the managers execute the decisions taken by such directors. Fiduciary duty of the Board of Directors (BoDs) towards shareholders has been a challenging task from the time companies came into existence. In today's financial services industry also, the role played by BoDs in safeguarding their stakeholders has been problematic. Modern stringent regulatory regimes emphasize the pivotal role required to be played by the BoDs of banks and other financial institutions. This paper concentrates on the laws applicable to failures of BoDs of financial institutions to act with care and diligence