Question

What can shareholders do to diminish the likelihood that the corporate veil will be pierced

Answer 1

Corporate veil basically is legal standing between the shareholders and the business. It is the barrier that separates the personal assets of shareholder from the business assets. If the corporate veil gets pierced, the personal assets of the shareholders may get counted as business’ asset.

In order to avoid the piercing of corporate veil, the shareholders must adhere to the following:

• Updating the company bylaws regularly
• Annual business meetings must be held every year
• Stock ledger must be maintained accurately
• There must be a clear segregation between business asset and personal asset