Companies and their directors are usually considered separate legal entities, but the judge said justice in this case requires this
corporate veil to be lifted.
Enlightened business owners occasionally considered the consequences of walking away from a California business after the Ralite decision, which set out certain factors that could prevent the FTB from using equitable principles to pierce the
corporate veil and hold individual .shareholders responsible for the tax delinquency of the corporation or LLC.
Kabogo, Esther Njeri, Patrick Gichure and Kamau Kabogo lost their cover after the court lifted the
corporate veil of Caroget Investments Limited, in which they are directors.
He claims that the Supreme Court is piercing the
corporate veil when it extends constitutional protections to corporations.
The court explained that the viability of such a theory is unclear, but then declined to answer the specific question because the plaintiffs failed to show that the CEO was so dominant over the nonprofit organization that disregarding corporate formalities and piercing the
corporate veil was warranted.
The tension was litigated through various courts, bringing us to today's patchwork, in which states shuffle various factors to determine when the
corporate veil will be pierced.
Department of Justice were both granted court-ordered peeks behind the
corporate veil in regard to a secret 2014 settlement by Schwyhart.
In his 2017 lawsuit, Bennett claimed that Garner had made a fraudulent conveyance in violation of Virginia Code 55-80 & 81 and asserted a claim seeking to pierce the
corporate veil and recover the judgment amount directly from Garner.
As discussed in Jones & Trevor Mktg., the alter ego doctrine is used by plaintiffs and creditors to pierce the
corporate veil and hold individual shareholders liable for the debts and liabilities of the corporation.
This case is important because it means that going forward, business owners might not be able to hide behind the
corporate veil but can be sued in person - if they acted in bad faith.
The so-called piercing of the
corporate veil when courts put aside limited liability and hold a corporation's shareholders or directors personally liable for the corporation's actions or debts is usually the result of serious misconduct, and therefore rare.
As the gap between punitive and compensatory damages decreases, piercing the
corporate veil remains a common attempt, plagued with inconsistencies in rulings and interpretation of the law.
