Undercapitalization will be considered convincing evidence that the corporate owners intended to use the corporate façade to escape liability.

Question

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Undercapitalization refers to a situation where a company's capitalization is insufficient to support its operations or finance its growth. If a company is undercapitalized intentionally, it can be used as evidence that the owners intended to use the corporate entity to avoid personal liability, and this can lead to piercing the corporate veil. So, undercapitalization can be considered convincing evidence that the corporate owners intended to use the corporate façade to escape liability.

Undercapitalization Will Be Considered Convincing Evidence That the Corporate Owners