The corporation fails to adhere to certain corporate formalities such as the election of directors.

Corporate funds are used to pay the personal debts and expenses of the individual defendant or alternative corporation.

The business shares residential or corporate address.

There is a co-mingling of private and corporate assets such as shared bank accounts, funds, and records.

The individual defendant owns all or almost all of the corporate stock.

The individual defendant controls the corporation.

This requires a case-by-case factual analysis.įactors to Consider for Veil Piercing in CaliforniaĬalifornia courts may pierce the corporate veil when one or more of the following factors are present and the same are indicative of injustice: Instead, the primary consideration is whether it would be unreasonable or unjust to refuse to pierce the veil. Wrongful conduct is not required to pierce the corporate veil under the alter ego theory of liability in California.

It would be unjust to treat the corporate acts as separate from the acts of the shareholder or the alternative corporation.

The entities have a unity of interest, i.e., they share funds, are run by the same directors, and have the same shareholders, and.

California courts may pierce the corporate veil under this doctrine if: The primary avenue of piercing the corporate veil in California is the alter ego doctrine, which allows veil piercing when the liable business entity is merely an “alter ego” of the party you seek to hold liable. Such constructions are not illegal per se, but they can be misused. Shell companies, holding companies, and subsidiary corporations are commonly used to limit the liability of a parent company. The alter ego doctrine is typically utilized to impose corporate-to-corporate liability, i.e., hold a parent company liable for the debts of its subsidiary, while a common law analysis is often required to hold individual directors liable for corporate misconduct. (2) under the “alter ego” doctrine of liability. (1) at common law, where wrongful conduct is typically required, or The plaintiff must overcome this presumption based on the facts of each case. Closed corporations are the most susceptible to veil piercing, but corporate protections are difficult to remove absent illegality or serious corporate misconduct.Īnytime damages are sought directly from a corporate subsidiary, parent company, shareholder, or director, California presumes corporate protection. Limited corporate liability in California, whether through a limited liability company, limited liability partnership, or corporation, is the foundation of the corporate form. “Piercing the corporate veil” is a legal colloquialism used to describe the removal of corporate entity protection to hold shareholders or directors personally liable for corporate debts and liabilities.

Pierce the veil concert california