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Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP
Piercing the Corporate Veil
- When courts find that the corporate organization is being misused, then the corporate entity can be disregarded.
- Basically, the shareholders lose the limited liability protection and the shareholders are treated like partners.
o Alter-Ego Theory
- This is theory or justification for piercing the corporate veil.
- If the corporate officials disregard the corporate entity and act the manner of a partnership, then there is no unity of ownership and interest.
- Therefore the corporation ceases to exist.