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0 pointsdragonwriter12y ago0 comments

> Moreover, unless they screwed up their corporate formalities, the individual shareholders should be protected from this type of loss.

Corporate formalities alone don't prevent piercing the corporate veil.

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3 comments · 1 top-level

andrewfong12y ago· 2 in thread

Yes, but it's really hard to pierce the corporate veil if all the formalities are in place. Negligence alone won't let you pierce the veil. Unless the shareholders effectively embezzled the corporation's assets, I don't see how you get around it.

dragonwriterOP12y ago

> Negligence alone won't let you pierce the veil.

Sure, but undercapitalization alone can with certain types of creditors, and gross undercapitalization can be a significant factor in favor of piercing the veil in other cases.

And actively concealing a known "leak" of funds held in trust for customers arguably goes far beyond mere negligence.

tptacek12y ago

Point of order: negligence alone routinely "pierces the veil", doesn't it? It's a tort.

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