If you pierce the corporate veil, this protection will be invalid and youll be legally responsible for the debts of your business.In essence, the corporate veil is the legal standing in which youre protected from the liabilities and debts of your business.Simply speaking, this veil is recognized as a legal division of your personal assets and self from your business.
![]() What Happens When a Piercing the Corporate Veil Occurs Corporate veils are only pierced when the shareholders or owners use the corporation in a fraudulent manner, or they fail to separate the business assets from their own. As a business owner, it is possible to pierce the corporate veil by not adhering to the formalities of owning a corporation. As a business owner, it is very important that your corporation follows all of your state and local laws and requirements. We provide a way to incorporate, create bylaws, and ensure corporate compliance to reduce the possibility of piercing the corporate veil. As such, proof will need to be provided that shows your company has pierced the corporate veil. Once this proof is provided, youll be held liable for any debts your company may have. Innocent parties that were not part of the fraudulent activities or wrongful acts are not held liable. Public companies, for instance, that pierce the corporate veil will not have all shareholders held liable for the debts incurred. Instead, only those that were responsible for the activities that pierced the veil will lose their legal separation of the business and their own personal assets. Piercing the veil is a serious matter that will require the assistance of a lawyer. ![]() Protection against losing your corporations limited liability status will require diligent following of the responsibilities of your corporation. An accountant or lawyer can ensure that your business does not pierce the corporate veil and that all of the legal responsibilities your business must adhere to are adequately met. This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. A helpful tool Rocket Lawyer is a helpful tool for professionals who need legal documents at an affordable price. Its one of the top resources I recommend, because theyre excellent at what they do. Stay protected Document Defense will connect you with a lawyer to help enforce your document.
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