Piercing the Corporate Veil: The Threshold Criteria

摘要

A group of radiologists form a professional corporation (PC) with the express intention and objective of insulating themselves against personal liability for the actions, obligations, and debts of the PC. Their concern is the protection of their personal assets should their newlyformed business entity incur liabilities that exceed its assets. As shareholders in the PC, they feel comforted by the protection from personal liability for the corporation's obligations with which the law generally endows shareholders. Indeed, it is a firmly entrenched principle that the corporate form may not be lightly disregarded . But there are conditions under which this insulation will be ignored, a situation more commonly referred to as "piercing the corporate veil." Although a high threshold must be satisfied before the corporate veil will be pierced, the protection offered by the formation of a PC is by no means absolute, and shareholders failing to adhere to requisite protocols may suffer the loss of personal assetsto satisfy corporate obligations.