Application of Theory of Piercing Corporate Veil of a Company in Identification of Iranian State Companies

Nader Mirzadeh Koohshahi¹ Narges Khojandi Jazi²

1) Faculty of law and political science, university of Tehran-Corresponding Author E-mail:
2) Faculty of law, Kish international campus- Presenter E-mail:

IOI Code : XDKH-HZZGE
Publication : Second National Conference on Law, Jurisprudence and Culture(conflaw.ir)
Abstract :
    This article studies the Theory of Piercing the Corporate Veil in Iranian Public Law, with respect to public companies. Piercing veils refers to the concept of ignoring the independent corporate veil of companies for the extension of the company’s liability to the shareholders and directors. Since in the Iranian Public Law, this theory has not been accepted as a principle or rule, the researcher has investigates the rules of the “Law of Prohibition of Intervention of State Staff in the Public Transactions”, “State Employment Law, “Law of Management of State Services”, “Law of Public Calculations”, “Law of Elimination of Hindrances of Competitive Production”, “Law of Maximum Utilization of Technical & Production Capability”, “Law of Adjustment of A Part of State Financial Regulations”. It seems that despite the general acceptance of the non-extension of the rule of piercing the corporate veil in the Iranian Public Law, it could be concluded from the above investigated seven laws that the legislator does not negate the application of the theory of piercing the veil. However, for the determination of the law governing the public companies, we should practically determine the real liability of the directors in violation of the regulations related to the legal prohibition and restrictions mentioned in the rules, by piercing the veil. This article concluded this theory, despite its application in the Iranian law, could be an exception to the principle of the independent legal entity, so that the courts could resort to it and extend the liability to the directors and shareholders, and in the meantime, could be a support for the compensation of the suffered losses. In view of the economic application, being aware of this rule, the parties to the contract may conclude their transactions in a secure condition.

Keywords : piercing corporate veil state company public law governing law