Shareholder Liability : Piercing the Corporate Veil

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Generally, in a corporation, shareholders are not personally liable for the acts of the corporation. However, shareholders may be personally liable if a court determines that the organization ignored corporate goals and formalities and acted to further the interests of one or more shareholders. Courts will intervene if injustice results after shareholders treat assets of the corporation as their own, use corporate funds to pay private debts and fail to hold regular meetings. Typically, only shareholders who are active in the management of the corporation may be held personally liable when a court intervenes. This is called lifting or piercing the corporate veil.