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Simple English definitions for legal terms
corporate veil
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A quick definition of corporate veil:
The corporate veil is a legal concept that separates a corporation from its shareholders. This means that the shareholders are not personally responsible for the actions of the corporation. However, in some cases, the court may "pierce the corporate veil" and hold shareholders accountable for the corporation's wrongful acts. This is called disregarding the corporate entity. It is important to note that there is no clear rule for when the corporate veil can be pierced, and courts often rely on labels or characterizations of relationships to make their decision.
A more thorough explanation:
Definition: The legal concept that separates the actions of a corporation from its shareholders, protecting them from personal liability for the corporation's actions.
For example, if a corporation is sued for breach of contract, the shareholders are not personally responsible for paying damages. Instead, the corporation's assets are used to satisfy the judgment.
Definition: The legal process of disregarding the corporate veil and holding shareholders, directors, or officers personally liable for the corporation's actions.
For example, if a corporation is used to commit fraud or other illegal activities, a court may pierce the corporate veil and hold the individuals responsible for the damages caused.
Overall, the corporate veil is an important legal concept that protects shareholders from personal liability for the actions of the corporation. However, in certain circumstances, the veil may be pierced to hold individuals accountable for their actions.