Coporations Have a Separate Legal Personality

Written by Adam Peck Category: Injury Law January 15th, 2013 2 min read

One of the key legal features of corporations are their separate legal personality, also known as “personhood” or being “artificial persons”.

However, separate legal personality does allow corporate groups a great deal of flexibility in relation to tax planning, and also enables multinational companies to manage the liability of their overseas operations. There are certain specific situations where courts are generally prepared to “pierce the corporate veil”, to look directly at, and impose liability directly on the individuals behind the company. According to California Business Law Attorney Steven C. Peck the most commonly cited examples are:

Where the company is a mere faÃ§ade;
Where the company is effectively just the agent of its members or controllers;
Where a representative of the company has taken some personal responsibility for a statement or action;
Where the company is engaged in fraud or other criminal wrongdoing;
Where the natural interpretation of a contract or statute is as a reference to the corporate group and not the individual company;
Where permitted by statute (for example, many jurisdictions provide for shareholder liability where a company breaches environmental protection laws) in many jurisdictions, Where a company continues to trade despite inevitable bankruptcy, the directors can be forced to account for trading losses personally;

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.