Losing Your Corporate Status
Friday, January 27, 2012 at 2:14PM One of the main attractions of forming a corporation is the liability protection a corporation provides its shareholders. Liabilities of the corporation are not liabilites of the corporation unless the shareholders sign a personal guarantee where they agree to be liable for certain corporate liabilites or the corporate protection is lost.
How can the corporate protection be lost? By not following the corporate formalities. If the procedures and requirements set out by statute to create and govern the corporation are not followed. You must be thouroughly aware of the corporate requirements or seek legal advice to help you comply. You should maintain a corpotate book that contains all of the dcouments relating to the creation and governance of the corporation which will always go a long ways towards establishing a defense to an attempt to strip away your corporate protection.
When a court strips the corporate protections away, this is commonly referred to as "piercing the corporate veils".
If you do not have a corporate book, haven't done anything to the corporate book since the corporation was created or just are not sure if your corporation has follwed all of the corporate formalities necessary to keep the corporate protection, contact NLF today to have your corporate book reviewed.
NLF Corporate Book Review and Update