Professional Documents
Culture Documents
CORPORATION
An entity owned by shareholders who
elect a board of directors that appoints
officers.
LIABILITY
Shareholders have an equity stake in
the company
and can typically only lose what they
have invested
BUT shareholders may be held liable
for a corporations debt by piercing the
corporate veil; a corporation may be
held liable for a shareholders debts by
reverse veil piercing and; a sister
corporation may be held liable for
another corporations debts under
enterprise liability
Piercing the Corporate Veil:
shareholder/parent company may be
held liable for corporations debts
where (1) there is unity of interest12
and (2) adherence to the separate
corporate existence would sanction a
fraud or promote injustice13 also
(permissively) (3) dont pierce where
creditor has assumed risk14