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Simple English definitions for legal terms

Piercing the Corporate Veil

Read a random definition: non juridicus

A quick definition of Piercing the Corporate Veil:

Piercing the corporate veil is when a court holds a corporation's shareholders or directors personally responsible for the corporation's actions or debts. This usually happens when the corporation has done something really bad, like mixing personal and corporate money or not having enough money when it started. Creditors can also try to pierce the veil if they think the corporation was created just to avoid paying them. Each state has different rules for when the veil can be pierced, but generally, it's not easy to do. Courts like limited liability because it helps investors and the economy, so they only do it in extreme cases.

A more thorough explanation:

Definition: Piercing the corporate veil refers to a legal situation where a court holds a corporation's shareholders or directors personally liable for the corporation's actions or debts, setting aside the limited liability protection. This is usually done when there has been serious misconduct, such as abusing the corporation or undercapitalization at the time of incorporation. The law varies by state, and courts have a strong presumption against piercing the corporate veil.

Example: Let's say a corporation is formed with the intention of avoiding liability for a risky business venture. The corporation is undercapitalized and the shareholders intermingle their personal and corporate assets. If the business fails and creditors are left with unpaid debts, they may try to pierce the corporate veil and hold the shareholders personally liable for the debts.

Explanation: This example illustrates how a corporation can be abused to avoid liability, leading to the piercing of the corporate veil. The shareholders' personal assets may be at risk if the court finds that the corporation was used as a mere instrumentality to perpetrate a fraud or promote injustice.

Example: In another scenario, a corporation is formed with proper formalities and conducts business in good faith. However, one of the shareholders engages in fraudulent activities, using the corporation to perpetrate the fraud. Creditors may try to pierce the corporate veil and hold the shareholder personally liable for the debts.

Explanation: This example shows how a shareholder's misconduct can lead to the piercing of the corporate veil, even if the corporation itself was not involved in any wrongdoing. The court may find that the shareholder used the corporation as an agent to conduct business in an individual capacity, making the principal vicariously liable.

picketing | Piercing the veil

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AngryMiniCar
12:01
OHHH LMAOO
12:08
ho I feel like David goggins
12:48
im so bored
12:48
the children (me) yearn for the classroom
12:56
november lsat LETS GO
NosyBeagle
12:58
^ me if I beef the august lsat
AngryMiniCar
13:47
^ same boat
NosyBeagle
14:59
me: "there's no way the answer is C 3 times in a row" narrator: the answer was C 3 times in a row
NosyBeagle
14:59
gotta stop second guessing myself
15:09
im moving tmw to wake forest univ from nashville omg im so nervous im gona be all alone out there in the forest
15:09
being an adult be so lonely i need som hoes
starfishies
15:24
After spending the whole cycle here and Reddit I thought all law students were going to be insane type a tweakers
starfishies
15:24
but after finding a roomie for law school ive discovered that some are actually normal and calm people 😭not me tho
15:25
bigfatsloth I'll be at wake next year. Let us know if you like it out there!
15:30
REALLY
15:30
WOOO
15:30
ill let u know
AngryMiniCar
15:31
@NosyBeagle: I have upperhand in that by having goldfish memory. Did I choose C 10 times in a row? No clue. Therefore I'm correct
NosyBeagle
15:42
@AngryMiniCar: LMAO i wish
NosyBeagle
15:43
@bigfatsloth: good luck. ily! (had to click on wake forest to see where that is)
NosyBeagle
15:47
trying to force myself to do a third set of drills. Im kinda tapped out in the brain department
15:50
pro tip: wake forest is not in wake forest, nc
15:50
dont get lost when moving
anyone else going to school in their current city?
AngryMiniCar
16:00
@NosyBeagle: take a hard nap you deserve it
NosyBeagle
16:02
can't. I'm at work ):
NosyBeagle
16:02
thanks tho
AngryMiniCar
16:29
lmaoooo studying on company dime???
AngryMiniCar
16:29
Me too tho
AngryMiniCar
16:29
Lol
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