Liability protection is one of the biggest advantages to incorporating a business. When forming a corporation, LLC, or similar entity, a \u201ccorporate veil\u201d is formed that creates a separation between the entity and personal shareholder assets. In some instances, courts will pierce this protection and hold shareholders personally liable for the debts and liabilities of the corporation, if the shareholders are found guilty of having misused the corporation as their alter ego.<\/p>\n
Many lawsuits apply the legal theory of the \u201calter ego\u201d wherein the corporate entity is shown to be a sham and\/or an alter ego of one or more individuals that have brought on injurious conduct and who essentially utilized the entity as a blanket to hide behind. Oftentimes this allegation comes into play when a corporation\u2019s assets or insurance are inadequate to pay debts or claims. The shareholders can become personally liable.<\/p>\n
In California, two requirements must be met to pierce (more…)<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Liability protection is one of the biggest advantages to incorporating a business. When forming a corporation, LLC, or similar entity, a \u201ccorporate veil\u201d is formed that creates a separation between the entity and personal shareholder assets. In some instances, courts…<\/span><\/p>\n