Posted by David H on March 13, 2002 at 20:07:38:
>I’m no expert on this, but what you’re describing
>sounds like “piercing” the corporate veil. If you >don’t run the corporation like a corporation or
>engage in illegal actvity this can happen. However, >that is not a normal occurrance
“Piercing the veil” would be to sue and reach someone, like a shareholder, who is not involved in the day to day operations of the company. Suing the company and the directors/officers is not “piercing the veil” - by suing an officer, you are suing them for their personally negligent (or whatever) behavior in the performance of their duties for the company. It has nothing to do with whether or not one operates the corporation properly.
>Otherwise it would be useless to incorporate.
It’s not useless for shareholders who aren’t officers or directors of the company. D&O Liability insurance is a “real” product - I only quoted one reference to the topic of many, you could find many more others. Why do you think anyone would offer, or buy this product?
>As an aside I wouldn’t trust an article about why you
>need to buy insurance that is written by the >insurance company trying to sell you the insurance.
And I wouldn’t trust an article about why I need an LLC written by someone trying to sell me the package to create the LLC. Would you?