PIERCING THE CORPORATE VEIL

By Kelly Bagla, Esq.

One of the biggest advantages to incorporating a business is the Owners enjoy protection from being held personally responsible for the debts and liabilities of the corporation. A “Corporate Veil” is created between the Owner’s personal assets and the business. When properly managed, corporate veils provide significant personal liability protection against lawsuits, creditors, and other disputes.

When a corporation is not property managed, Corporate Veils can be pierced. Here are some factors that courts consider whether allowing Corporate Veils to be pierced:

• Did the corporation hold annual meetings?
• Did the corporation file its annual reports?
• Did the Directors maintain proper financial accounts to prevent commingling of funds?
• Was the corporation formed significantly undercapitalized?
• Was stock issued according to the Securities Act?

There is a lot more to incorporating a business than just filing the articles with the State.

Please contact us if we can help you avoid these issues.

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