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Simple English definitions for legal terms

Piercing the Corporate Veil

Read a random definition: res sanctae

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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got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
WorthlessAttractiveZombie
7:44
My berkeley paragraph finally disappeared. I definitely think it is just an indicator that they are actively reviewing files, and does not mean anything about A, WL, or Rs
WorthlessAttractiveZombie
7:46
Also has anyone's date disappeared for W&L? Mine did last night
7:55
@WorthlessAttractiveZombie: mine did yesterday morning
7:56
Oops sorry I meant Vilanova. Mine disappeared last week
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