When can the corporate veil be pierced?

• A. Only in cases of fraud or civil wrongdoings
• B. Whenever directors choose
• C. During annual meetings
• D. When the corporation earns profits

Answer: (A)

Piercing the corporate veil is an extraordinary step that happens when the corporate form is being used to commit fraud or otherwise unjustly harm someone, so the individuals behind the company can be held personally responsible. This is why the best answer centers on fraud or civil wrongdoings: courts deny the protection of the corporate shield only to prevent wrongdoing and ensure fairness, not for routine business decisions.

The other options don’t fit because veil piercing isn’t triggered by mere governance actions like holding annual meetings, nor by profits or a director’s discretion. Those are part of normal corporate operations, not abuses of the corporate form. In practice, courts also consider factors like treating the company as an alter ego or failing to maintain proper formalities, but these are means to establish misuse, not standalone causes.