Veil

Spinning twirling, fluttering.
So thin and gossamer
Forever between us.

The corporate veil is somewhat elusive. It's definition depends a lot on the particulars of a given situation. Yet, stockholders, shareholders, and directors all care about it. Much like being a limited partner the corporate veil protects investors. Allowing one to limit their risk to a set numerical number instead of personal liability. The only problem is that more and more often we hear about debtors piercing the corporate veil and looting shareholders assets. While most innocent shareholders have nothing to fear, it is very important to examine your activities with any company you invest in, after all you wouldn't lend money to someone you knew was performing an illegal activity, right?

Most often the corporate veil is lifted to protect creditors. As a corporation can form a corporation, it can be quite difficult to find an actual person who can be held responsible, additionally parent corporations can move funds from one company to another in some very shady manners. Some important things to watch are as follows.
Who manages the corporation, and what are their qualifications?

• How much access do you have to the company records, are they complete, and do any records look strange? If one company is transferring a lot of cash to another without any consideration, now might be the time to bail.
• Are corporate accounts commingling with another corporation or individual? This goes beyond the people who borrow from petty cash, and looks into embezzling.
• And does another corporation really run the show? Pay bills,and day to day expense, make important decisions, ect

As always I encourgae everone to watch their money and be careful. Also for further reading check out Reverse Peircing of the Corporate Veil by Jay and Arthur Winston, Winston and Winston P.C. , as this article sets forth what a creditor will have to prove to get to the real money.