The Rationale for Piercing the Corporate Veil to Enhance the Accountability of the Municipal Manager in Mahikeng Local Municipality

Abstract

This article analyses the possible application of the principle of piercing the corporate veil in a local municipality as a measure of fostering and enforcing accountability of the municipal manager and the municipal council in Mahikeng local municipality. The principle of piercing the corporate veil is provided under section 20(9) of the Companies Act 71 of 2008. The piercing of the corporate veil occurs when the courts disregard the division between a company and the person who controls it and then attribute liability to the person who misused the principle of a separate legal personality in that company. The article identifies, inter alia, maladministration, fraud and corruption as the basis on which the courts would pierce the corporate veil in Mahikeng local municipality to ensure accountability in the municipal manager. It is submitted that the principle of piercing the corporate veil should be carefully applied in Mahikeng local municipality to promote accountability and better service delivery to the community. The principle of piercing the corporate veil could help to ensure accountability of municipal funds and resources in Mahikeng local municipality by curbing the improper use of municipal funds and resources by the municipal council and the municipal manager. Lastly, the possible advantages of piercing the corporate in Mahikeng local municipality are discussed.

Keywords

• accountability
• transparency
• piercing the corporate veil
• municipal manager
• legal personality