Shareholder Liability for Corporate Obligations in Small Business

Deana Nance and Joseph D. Vu
Additional contact information
Deana Nance: Louisiana Tech University
Joseph D. Vu: DePaul University

Journal of Entrepreneurial Finance, 1993, vol. 2, issue 2, 175-182

Abstract: This paper discusses the issue of shareholder liability for corporate obligations in small business. Although the law allows individuals to incorporate their businesses to limit liabilities, the courts have in many cases pierced the corporate veil and held shareholders liable for obligations of the corporation. The doctrine of piercing the corporate veil rarely affects shareholders of publicly-traded firms. In most cases, this doctrine would only reach shareholders of small, closely held firms. While fraud or unjust intent provide reasons for the court to disregard corporate entity, oftentimes the honest but uninformed actions of shareholders are to blame. To maintain limited liability, shareholders of small businesses must act in accordance with die corporate form of ownership in representing the firm, managing the firm’s assets, and financing the firm.

Keywords: Shareholder Liability; Small Business (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 1993
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://jefsite.org/RePEc/pep/journl/jef-1993-02-2-f-nance.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:2:y:1993:i:2:p:175-182

Access Statistics for this article

More articles in Journal of Entrepreneurial Finance from Pepperdine University, Graziadio School of Business and Management Contact information at EDIRC.
Bibliographic data for series maintained by Craig Everett ().