The following is intended to provide information and clarification concerning the subject of Exposure to Piercing of the Corporate Veil. 

• Exposure to Piercing of Corporate Veil. Exposure to the piercing of the corporate veil, effectively eliminates the liability protection of the parent company: 

  1. for ANY and ALL of its the subsidiaries (and subsidiaries of subsidiaries);

   

  1. for ANY and ALL operations, activities and failures to act by any subsidiary or their agents or employees;

   

  1. for ANY and ALL types of cases, including, but not limited to, contracts, subsidiary partner dispute cases, allegations of fraud cases, bankruptcy, employee cases, negligence, slip and fall cases, other personal injury cases and other torts (a wrongful act or an infringement of a right (other than under contract) leading to civil legal liability), etc. 

   

  1. This exposure to the Piercing of the Corporate Veil defeats the purpose [or main/significant purpose] of operating businesses under separate LLC's and corporations.   

   

Exposure is often in the millions of dollars, in addition to the significant and costly added legal fees and costs of work hours of employees and agents for the parent company to counter attacks on the corporate veil, where there is exposure. 

"Many observers suggest that American citizens sue more readily than citizens elsewhere, and that American judges shape society more powerfully than judges elsewhere." Ramseyer & Rasmusen, Are Americans More Litigious? Some Quantitative Evidence, in The American Illness: Essays on the Rule of Law 69 (F. H.Buckley ed., 2013).Harvard Law School.

What are the next steps to protect my parent company from a piercing of the corporate veil?

The remedies for companies with exposure to piercing of the corporate veil vary greatly, but generally, having appropriate and protective By-Laws and Operating Agreements, maintaining corporate formalities, not comingling funds, arms-lengthy agreements and contracts between parent and subsidiaries, treating the entities as though not affiliated (seek legal counsel to better understand this), etc.  

Contact Michelle DelMar, Esq., for next steps concerning how to protect your company from piercing of its corporate veil and related matters. 

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