Difference between revisions of "Corporate Shield"
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| − | A '''"Corporate Shield"''' is the byproduct of forming a [[corporation]]. The main reason that people form corporations is to shield themselves and their personal assets from individual liability for corporate acts. Courts allow this benefit only if the corporation is properly run, adequately capitalized, and completely separate as a legal entity. If a [[court]] finds that the corporate privilege has been abused, the court may disregard the corporate protection, leaving the corporation’s [[shareholders]] (even if only one or two people are shareholders) open to [[liability]] for the corporation’s acts relating to that abuse. <ref> | + | A '''"Corporate Shield"''' is the byproduct of forming a [[corporation]]. The main reason that people form corporations is to shield themselves and their personal assets from individual liability for corporate acts. Courts allow this benefit only if the corporation is properly run, adequately capitalized, and completely separate as a legal entity. If a [[court]] finds that the corporate privilege has been abused, the court may disregard the corporate protection, leaving the corporation’s [[shareholders]] (even if only one or two people are shareholders) open to [[liability]] for the corporation’s acts relating to that abuse. <ref>California Dept. of Corporations [[http://www.corp.ca.gov/]]</ref> |
| − | The best methods for protecting a | + | The best methods for protecting a corporation's "shield" are: |
*Avoid Tortious Conduct | *Avoid Tortious Conduct | ||
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*Observe Corporate Formalities | *Observe Corporate Formalities | ||
| − | There are other, more complicated methods for protecting not only | + | There are other, more complicated methods for protecting not only assets, but personal information about the shareholder/owners. These include off-shore registrations, trusts and holding companies. |
== References == | == References == | ||
Revision as of 19:15, July 21, 2007
A "Corporate Shield" is the byproduct of forming a corporation. The main reason that people form corporations is to shield themselves and their personal assets from individual liability for corporate acts. Courts allow this benefit only if the corporation is properly run, adequately capitalized, and completely separate as a legal entity. If a court finds that the corporate privilege has been abused, the court may disregard the corporate protection, leaving the corporation’s shareholders (even if only one or two people are shareholders) open to liability for the corporation’s acts relating to that abuse. [1]
The best methods for protecting a corporation's "shield" are:
- Avoid Tortious Conduct
- Do Not Treat Corporate Money Like It is Your Own
- Be Very Careful Changing Business Entities
- Disclose Your Corporate Status
- Observe Corporate Formalities
There are other, more complicated methods for protecting not only assets, but personal information about the shareholder/owners. These include off-shore registrations, trusts and holding companies.
