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A shareholder of a company limited by shares has limited liability. This means that the shareholder is not liable for the acts and omissions of the company. The liability of the shareholder is limited to the nominal value of its shares. This is because the company has a separate legal personality to the shareholders and, therefore, a separate and distinct liability to any individuals involved in the company.

The corporate veil may only be lifted (or pierced) by the courts to impose personal liability on shareholders in exceptional circumstances. For example, where there has been some element of fraud or wrongful trading, or where the company has been incorporated as a mere sham or façade to avoid a legal obligation or conceal the true facts, or where the acts of the subsidiary are in truth the acts of the parent and there would be some injustice perpetrated by refusing to lift the corporate veil, or where there is a specific legislative provision that extends liability to related entities.