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piercing the corporate veil
(redirected from Pierce the corporate veil)

   Also found in: Legal, Wikipedia 0.01 sec.
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.



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At least one judge in New York has ruled that the creditor could not pierce the corporate veil because the creditor should have, and, could have, determined before it approved credit that the principals were paying their personal debts with the corporate tenant's funds.
It''s difficult to pierce the corporate veil under the laws of those two states and that alone drives many, many companies to register in those particular states.
The new Company Law, however, allows courts to pierce the corporate veil under certain circumstances.
 
 
 
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