Corporate veil

A legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and other obligations.

Piercing the corporate veil
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors.

Case study
Ampex Corp. (the plaintiff-creditor) v. Office Electronics, Inc. (the parent corporation)

Factors enumerated by the court
• Two of the three directors of the subsidiary were officers of the parent • the parent owned fifty-one percent of the subsidiary • when the plaintiff had refused to grant corporate credit to the subsidiary, the parent agreed to inventory $20,000 worth of tapes for the benefit of the subsidiary • the parent advanced monies to the subsidiary for its commission sales accounts • the parent received merchandise for the subsidiary from the plaintiff, along with monthly statements and invoices • the parent did all the shipping and billing to the customers of the subsidiary. In addition, the parent had continued to pay for verbal orders made by the subsidiary, even after the parent had given written instructions to the plaintiff not to conduct business on this basis

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