California Injury Attorney Blog

One of the key legal features of corporations are their separate legal personality, also known as "personhood" or being "artificial persons".

However, separate legal personality does allow corporate groups a great deal of flexibility in relation to tax planning, and also enables multinational companies to manage the liability of their overseas operations. There are certain specific situations where courts are generally prepared to "pierce the corporate veil", to look directly at, and impose liability directly on the individuals behind the company. According to California Business Law Attorney Steven C. Peck the most commonly cited examples are:

Where the company is a mere façade;
Where the company is effectively just the agent of its members or controllers;
Where a representative of the company has taken some personal responsibility for a statement or action;
Where the company is engaged in fraud or other criminal wrongdoing;
Where the natural interpretation of a contract or statute is as a reference to the corporate group and not the individual company;
Where permitted by statute (for example, many jurisdictions provide for shareholder liability where a company breaches environmental protection laws) in many jurisdictions,
Where a company continues to trade despite inevitable bankruptcy, the directors can be forced to account for trading losses personally;