Corporate Liability

Question 1

Piercing the corporate veil

Answer 1

Here, the Corporations existence is ignored, Shareholders, officers, and directors are held personally liable.

Typically applied when Shareholders control or use the C to evade a personal obligation, perpetuate crime or fraud, commit an injustice etc

Question 2

Is being a sole SH grounds for piercing the veil ?

Answer 2

No, An individual being a sole shareholder, director, officer in a corporation is not, by itself, grounds for piercing,

Question 3

can the failure to hold meetings or taking records justify piercing ?

Answer 3

No, the failure to hold corporate meetings or records cannot justify piercing

Question 4

Parent corporations

Answer 4

If a parent corporation owns all of a subsidy corporations shares, the corporate veil cannot be pierced to reach the parent except when it could be be pierced to reach an individual shareholder

Question 5

Inadequate caplitzlation

Answer 5

Is not a sufficient ground for its own for piercing, however, it is a factor to be considered

Question 6

Who may pierce the veil ?

Answer 6

1. A tort claimant who has not willingly entered into a transaction with a C is more likely than a tort or contract claimant who has.
2. A shareholder is not permitted to pierce the corporate veil for her personal benefit

Question 7

Shareholder management agreements

Answer 7

All shareholders at the time of the agreement may agree to alter management of the corporation to be inconsistent with statue,

Myst be noted conspicuously on stock certificate or in shareholder information, becomes ineffective when C becomes a public C.