In the US, sometimes the court may “pierce the corporate veil” when actions are particularly egregious or unlawful and hold the shareholders or directors personally liable.
Rather than go into all the specifics of law (since I'm not
a lawyer), I'll cite some examples where corporate executives were charged personally:
Limited liability only protects the shareholders. It exists because shareholders have no control over the corporation. It does not protect agents of the corporation, such as management, because they do have control of the corporation.
It is right on the incorporation forms prior to entity approval, and in my jurisdiction the Lawyer made this very clear as I make choices hiring ex-servicemen contractors/staff (numerous PTSD issues can limit roles... like "dealing" with aggressive/rude customers can be a bad idea etc.) Additionally, blindly using Lexis Nexis forms can cause issues too, as the same clauses have different legal definitions in different regions.
While a C firm does _often_ protect board member personal assets from civil cases, it also does not guarantee protection.
Also, international investors do not usually create a US LLC given it usually trips 2 tax codes. Talking with awesome AMCHAM reps about this area is probably in your best interest, but most international firms create a Type C corporation on US soil.
Ask your local corporate tax lawyer about liabilities to confirm whether your jurisdiction has harmonized corporate laws.
Being a president/CEO is not what most assume, and even a shareholder can get messy too. Despite pop-culture urban legends, it is not a role for clowns or cons. =3
Agreed, the key phrase here is _limited_ liability not immunity.
I am still trying to figure out how Boeing got around their commercial insurance companies? There is a bag of vipers also waiting for their turn with the CEO for sure... =3
Isn’t LL about protecting your assets not you from jail time? I can’t start a LLC, have the LLC pay someone to kill you, and be scott free. “Sorry you can’t go after me, go after this shell company and try to put it in jail ha ha”
Yep, people should talk with a real local corporate lawyer or AMCHAM if unsure.
The hubris on YC from those that assume the rules don't apply to them is hilarious. But, I guess someone has to pay for the lawyers kids to get though university.
