piercing the corporate veil

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piercing the corporate veil

A theory used to reach the assets of individual shareholders when there is a judgment against a corporation but the corporation has no assets to satisfy the judgment. In general, if the shareholders operated a business in complete disregard of the corporate form,meaning they never had shareholder meetings,never voted on anything,never used the corporate name on stationary or paperwork, commingled personal funds and corporate funds, and generally behaved as if the corporation did not exist, then a court will impose personal liability for corporate debts.

References in periodicals archive ?
generally not pierce the corporate veil where there is only ordinary
191) See Prest, ibid at para 35, where it is held "if it is not necessary to pierce the corporate veil, it is not appropriate to do so, because on that footing there is no public policy imperative which justifies that course.
However, a court will not automatically pierce the corporate veil if the amount of corporate liability insurance is not adequate to compensate an injured plaintiff.
The reason why a creditor would feel it necessary to pierce the corporate veil usually comes down to money.
5) A Connecticut court held under the appropriate circumstances it could pierce the corporate veil of an LLC and hold members personally liable to third parties.
The failure to maintain the formalities is usually a factor taken into consideration when a creditor attempts to pierce the corporate veil.
The new Company Law, however, allows courts to pierce the corporate veil under certain circumstances.
Absent outright fraud or continuous commingling of assets by the managing shareholder, it would seem inconsistent and inequitable for the court to pierce the corporate veil based on dominance by a controlling shareholder who is exercising his statutory rights.
The court refused to pierce the corporate veil in a matter involving strict product liability.
Because China is a civil law country and because its courts have very little discretion to adjudicate cases outside the four corners of the statute, the provision needs more specificity as to the factors that courts should consider when deciding whether to pierce the corporate veil.
The appellate court reversed on the basis that negligence is tortious conduct which is not shielded from personal liability, hence it was not necessary to pierce the corporate veil in order to keep the alleged individual tortfeasor/member in the lawsuit as an individual party defendant.
The right to attach the assets of the LLC directly depends on the ability to pierce the corporate veil.