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| About"Piercing the corporate veil" by Tansin A. Darcos (TDARCOS) 04/20/2012, 6:47pm PDT | ||||
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| Piercing the corporate veil means that the corporation's existence is disregarded and the owners are treated as if they are the corporation, snd thus have personal liability for its debts and obligations.
Basically, for a small corporation you can get hit with a veil piercing if you don't keep up the paperwork to show that the corporation is a separate entity, and that the corporation does not mingle its money with the finances of the owners. In the case of a large corporation managed by non-owner managers, piercing the corporate veil is very unlikely absent proven fraud. Understand something else. When you as an individual are some place, the way you operate if you ran a business or otherwise handled your affairs, is subject to the law of the place where you are. This is not true in the case of a corporation. I have a corporation I originally chartered in Virginia when I lived there. I then moved to Maryland and had a choice: pay $120 to incorporate (charter) a new corporation in Maryland, or pay $100 and simply authorize my existing Virginia corporation to do business in Maryland. (The annual renewal fee would be the same in either case.) I chose to save the $20 bucks and authorize my VA corp to do business in MD. Okay, so now my Virginia corporation is authorized to do business in Maryland, is operated in Maryland and its headquarters is located (at my apartment) in Maryland. If I'm sued - in Maryland - what law applies to the corporation's operations in Maryland? Virginia's, because the law of the place where the corporation is chartered controls the internal operations. So if a corporation is sued anywhere in the United States, and the plaintiff suing wants to pierce the corporate veil, the courts of the state where the corporation is sued must follow the laws regarding veil piercing, of the state where the corporation was chartered, not of the state where the lawsuit is filed. This requirement is one of the reasons big corporations either eventually charter in Delaware or Nevada. Delaware has 300 years of corporation law and is very corporation friendly. Nevada also has a provision in its laws that basically prevents piercing the corporate veil unless fraud is involved. Director negligence, incompetence, misconduct and other things are not enough to pierce the corporate veil under Nevada law. California has much looser rules that make it easier to pierce a corporate veil for a California corporation so for a lot of businesses it's recommended that they incorporate (charter) in Nevada, then register in California as a foreign corporation. In the last 20 years, the courts have only allowed the corporate veil of a Nevada-chartered corporation to be pierced twice, and in both cases it was because the owners were committing fraud against creditors. |
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Verizon apparently has no usage cap for Internet by 04/15/2012, 1:37am PDT  Re: Verizon apparently has no usage cap for Internet by 04/15/2012, 12:00pm PDT Time Warner was worse by 04/15/2012, 12:22pm PDT Re: Time Warner was worse by 04/19/2012, 10:48am PDT Are you aware of "Piercing the corporate veil"? NT by 04/19/2012, 1:08pm PDT About"Piercing the corporate veil" by 04/20/2012, 6:47pm PDT Time-Warner not cancelling by 04/19/2012, 11:02am PDT |
