When can a court ignore my corporation and hold me personally liable?

Courts in Ontario treat piercing the corporate veil as a remedy of last resort — they generally respect the separate legal personality of a corporation. However, there are circumstances where courts will disregard the corporate form and hold shareholders personally liable.

The most established grounds include: fraud or misrepresentation, where the corporation is used as a device to perpetrate a deceit; the "alter ego" doctrine, where the shareholder completely controls the corporation and there is no real separateness (all corporate formalities ignored, funds completely co-mingled, the corporation is purely the shareholder's instrument); and cases of sham or agency, where the corporation is not really acting on its own behalf at all.

Courts look at factors like whether the corporation was properly maintained with separate accounts, whether corporate formalities (meetings, resolutions, proper bookkeeping) were observed, and whether the corporation had genuine economic independence from the shareholder.

Critically, statutory piercing also exists — certain legislation imposes personal liability on directors or shareholders directly, without needing to pierce the veil at common law. Director liability for wages and source deductions under the Employment Standards Act and Income Tax Act is an example. Personal guarantees are another route — not technically piercing, but the economic effect is the same.