A key reason that business owners and managers choose to form a corporation or limited liability company (LLC) is so that they won’t be held personally liable for debts should the business be unable to pay its creditors. … When this happens it’s called “piercing the corporate veil.”
People also ask, should the corporate veil be pierced?
The corporate veil can only be pierced if there is some “impropriety.” The court cannot pierce the corporate veil just because the company is involved in some impropriety. The impropriety must be linked to the use of the company structure to avoid or conceal liability.
Simply so, what is corporate veil in simple terms?
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.
