Piercing the corporate veil occurs only with privately held business entities. Publicly held corporations are not subject to holding individual shareholders liable for the actions or liabilities of the corporation. If, for example, any shareholder of General Motors were responsible for the entire amount of its losses, it is unlikely that any person would invest in the shares of the company (though this is far from clear in the case where responsibility for losses would be spread among thousands or millions of investors). As such, limiting shareholder liability serves a useful purpose in allowing huge sums of capital to be raised with less risk to the individual investors.
Corporate law (also corporations law or company law) |
|
Also See:
|
