What is the primary purpose of the corporate veil?

The primary purpose of the corporate veil is to protect shareholders from liabilities. When a corporation is established, it becomes a separate legal entity independent of its shareholders. This separation allows for limited liability, meaning that shareholders are typically not personally responsible for the debts and obligations of the corporation. In the event of financial difficulties or legal issues stemming from the corporation's activities, the shareholders' personal assets are generally shielded from claims made against the corporation. This principle encourages investment in the corporation, as individuals can invest without risking their personal wealth or assets beyond their investment in the company itself.

The other options do not accurately reflect the primary purpose of the corporate veil. Enhancing corporate profit margins, simplifying corporate structures, and restricting ownership interests are not the main focus of the corporate veil; rather, these options are tangential aspects that do not directly relate to the legal protection afforded to shareholders.