Piercing the Veil

Question 1

What is piercing the veil?

Answer 1

situation where court holds shareholders, director, and officers all personally liable for their corporation’s debts

Question 2

Shareholders, directors, and officers are NOT LIABLE with their PERSONAL ASSETS if they fuck up.

Question 3

Exceptions

Answer 3

Creditors and tort O could come A4 in a few situations:
1. Serious Undercapitalization
2. Alter-Ego
3. Lack of Formality

Question 4

Serious Undercapitalization

Answer 4

Keeping your company poro so they have no $$$ to give over to creditors and tort P’s.

Question 5

Alter-Ego

Answer 5

If a dominant shareholder pretends he is saving the whales and working for Greenpeace and pumps all the $$ into the documentary = this is not allowed.

No intermingling funds or purposes.
If there are small # of shareholders and targeted one is highly active doing different things, the Courts are more likely to pierce.
They cannot use the company as some type of mere instrumentality shell corporation to f other people too –> fraud.
Owner cannot treat it like his own bank account.

Question 6

Lack of Formality

Answer 6

No filings, records, meetings, not calling yourself a corp –> they will pierce you.
Courts will take this into account for corps, not LLCs.