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Under what circumstances may the veil of incorporation be lifted and the share-holders held personally reliable for the company's obligation?
Wiki User
∙ 11y ago
Under three circumstances, corporate veil can be lifted by court, One of them is as follows :
1. When no. of sharesholders in private ltd co. goes down below 2 and in the case of public limited co, when no. of shareholders goes down below 7, the court of law can lift the corporate veil and directors get liable for the entire debts of the the company in the case of winding up.
Abhay Kumar Srivastava
Pursuing CS (executive)
08650002400, dehradun
Wiki User
∙ 11y ago
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Under what circumstances a court may hold shareholders liable for debt of a corporation?
When they personally guarantee corporate obligations or the corporate veil is pierced as a result of the shareholders failing to recognize corporate formalities and treat corporate assets as their own.
When will the veil of incorporation be lifted by judiciary?
Exceptions to Limited Liability Torts (Injuries to Others) Members and managers of an LLC can be personally liable for financial loss if caused by their own careless behaviour. Breach of Duty "Duty of care" means that managers and owners of LLC have a legal obligation to manage LLC in good faith and in the best interest of LLC and its owners. There can be also other reasons to lose limited liability.
What do you mean by corporate veil?
A legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and other obligations. This protection is not ironclad or impenetrable. Where a court determines that a company's business was not conducted in accordance with the provisions of corporate legislation (or that it was just a facade for illegal activities) it may hold the shareholders personally liable for the company's obligations under the legal concept of lifting the corporate veil.
What are the defining features of shares?
Here are the defining characteristics of shares:decision-making and voting rights - owning shares of stock gives certain rightslimited liability for shareholders - ordinary shareholders are not personally liable for the debt of a company in the event of bankruptcyloss absorption for other investors (i.e. debt) and creditors - in the event of a liquidation, shareholders only get back their money if there is anything left over after creditors have been settled
What are the differences between a sole proprietorship and limited liability corporation?
In a limited liability corporation, the company is not personally liable for it, and the owners and shareholders will not get personally sued, only the company will. It has a high start up cost, and it has a long life. Sole proprietorship's have a low start up cost, generally have short life spans, and are personally liable,
Is it wise to allow your ex-wife who owes you 12000 in back child support and is not paying it to sign away her parental rights so you can split custody with your mother?
You really need to consult with a lawyer so that you have a complete understanding of what the consequences are of such a move. That being said, personally you must look out for the best interest of the children. If she is willing to sign away her parental rights, that says something about her character in terms of her obligation as a mother. I personally - and not knowing all the details under your circumstances - would want full custody of my children. This, especially if she does not have an interest in the children, does not visit them, communicate with them, etc. Still, I am saying this without complete knowledge of the circumstances involved (on both sides). See a lawyer!
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The most common characteristic of a corporation is financial responsibility. Corporations have limited liability which means that the corporation is responsible for paying it's debts. The owners or shareholders are personally shielded from that responsibility.
Who is eligible for getting gold medal in anna university?
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What if you are three weeks late on a car payment?
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Can a creditor freeze your corporate bank account?
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