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Simple English definitions for legal terms
pierce the corporate veil
Read a random definition: confessing error
A quick definition of pierce the corporate veil:
Definition: When a company is created to hide the actions of an individual or group, a judge may decide to hold those individuals responsible for any harm caused by the company. This is called "piercing the corporate veil." If the company is run like a real business, with meetings and shareholders, it is less likely that the individuals will be held responsible.
A more thorough explanation:
Definition: To prove that a corporation is just a front for an individual or group of people who control it, so that in a lawsuit, those individuals can be held responsible for the corporation's actions. This is only done if there is evidence that the corporation was created to deceive others.
Example: If a person owns a small business and incorporates it, they are protected from being personally sued if something goes wrong with the business. However, if the person uses the corporation to commit fraud or other illegal activities, a court may "pierce the corporate veil" and hold the individual responsible for the corporation's actions.
Explanation: The example shows how a person can use a corporation to protect themselves from personal liability. However, if they use the corporation to commit illegal activities, they can't hide behind the corporation and must take responsibility for their actions.