Which of the following describes 'piercing the corporate veil'?

Piercing the corporate veil refers to a legal concept where the courts set aside the limited liability of a corporation, allowing creditors to hold shareholders personally accountable for the company's debts and obligations. This action typically occurs when the shareholders have not adhered to the fundamental principles of corporate governance or have used the corporate structure to commit fraud or engage in other wrongful acts.

In essence, the corporate veil protects shareholders from being personally liable for the corporation's debts. However, if a court determines that the protection is being abused or misused, it may "pierce" this veil. This often happens in cases where there is evidence of a lack of separation between personal and corporate affairs, such as commingling of finances or failing to observe corporate formalities.

The other options provided do not capture this concept. For instance, requiring companies to disclose financial information relates more to transparency and regulation rather than altering liability issues. Limiting the number of shares issued concerns corporate structure but does not pertain to personal liability. Creating a subsidiary company relates to corporate strategy and structure but does not involve direct liability implications for shareholders. Thus, the action of holding shareholders personally liable for the company’s debts is the essence of piercing the corporate veil.