While limited liability concept is fundamental for encouraging entrepreneurship and innovation, piercing of corporate veil i.e., disregarding the limited liability and making shareholders personally liable, is not uncommon now-a-days considering the negative externalities created by defaulting firms.
Macey and Mitts (2014) have constructed a rational framework for conceptualizing the circumstances in which it is Page 6 of 19  appropriate and consistent with sound public policy to pierce the corporate veil.