Corporate Veil
Businesses that are incorporated typically shield principals of the corporation from being held personally responsibility for the debts and liabilities of the corporation. However, under special circumstances, those to whom the corporation is liable will attempt to "pierce the corporate veil," the legal term used to describe an action to have the corporation set aside for purposes of the litigation such that personal liability attaches, and personal assets can be reached (Larson, 2004). The facts and circumstances that may result in a piercing of the corporate view depend upon state law (Lawson, 2004), but generally the plaintiff has to prove that the corporation was set up to either perpetrate a fraud, or show that the incorporation was merely a formality and that the corporation never held proper shareholder meetings to distribute profits as dividends (Piercing the corporate veil).
Factors courts take into consideration to determine if a corporation is legitimate may include (Piercing the corporate veil):
Grossly undercapitalization
Failure to observe corporate formalities
Intermingling of assets of the corporation and of the shareholder
Treatment by an individual of the assets of corporation as his/her own
Failure to pay dividends
Siphoning of corporate funds by the dominant shareholder(s)
Non-functioning corporate officers and/or directors
Concealment or misrepresentation of members
Absence of corporate records
Using the corporation as a "facade" for dominant shareholder(s) personal dealings
Failure to maintain arm's length relationships with related entities
Manipulation of assets or liabilities to concentrate the assets or liabilities
After examining these factors, if the court determines that the unity of interest between the corporation and its shareholders are inseparable, and that it would be unjust to permit the corporate form to stand, a court will typically pierce the corporate veil (Lawson, 2004).
Bibliography
Larson, a. (2004, August). Piercing the corporate veil. http://www.expertlaw.com/library/business/corporate_veil.html#2
Piercining the corporate veil. Wikipedia. http://en.wikipedia.org/wiki/Piercing_the_corporate_veil
This was followed by the enactments by House of Lords in 1897 in Solomon v. Solomon & Company. The concepts of corporate entity and limited liability were incorporated in English law in the same period. In this case, the head court announced that a company is a separate legal individual completely different from the members or shareholders. From this announcement, we can say that a company is a separate legal
But the shareholders themselves need to be more aware and more involved in their company's business in order for any meaningful change to sustain itself: Shareholders, the intended beneficiaries of the corporate vehicle, are the ultimate capitalists: avaricious accumulators with little fiscal risk and no legal responsibility for the way in which they pursue their imperative to accumulate. Shareholders, not corporations, show indifference to the needs and values of society. It
The treatment of the undocumented workers has legal and economic implications, but is only an issue in the political arena. Companies that hire illegal immigrants are being socially responsible. The argument that illegals suppress wages is not based on sound evidence - the jobs illegals do would otherwise be unfilled. If anything, hiring illegals is socially responsible because it gives those people an opportunity to better themselves, something they otherwise
For example, AIG got into a lot of trouble during the Great Recession because it was paying retention bonuses so that people about to be laid off would stay on but this was controversial because AIG got bailed out by the federal government. Even though the bonuses were contractually obligated and evne though they served a specific purpose, the vitriol and invective was toxic. This despite the fact that
Privileging the rights and needs of people with financial stakes in the American auto industry runs counter to American ideals of equality and Rawlsian justice. Should we try to restrain, in this and other product liability situations, the litigiousness that seems to characterize American life? How might we do this? Litigation that is blatantly foolish against corporations, such as a recent lawsuit against Quaker Oats for false advertising because Crunchberry cereal
The CorporationThe Corporation is a documentary that critically explores the role of corporations in society and the global economy. It uses the premise that if corporations were legally persons, their behaviors would be seen as psychopathic, because they put profits before all else�before people, before society�s needs, before the environment: profits are all that matter to the corporation. Yet governments are virtually controlled by them through special interest groups and