Under which circumstances will a court hold the shareholders personally responsible for the corporation's actions?

Question

Quizplus · Accepted Answer

Only in cases of fraud on creditors can shareholders be held personally responsible for the corporation's actions, under the legal doctrine of piercing the corporate veil. This occurs when the court determines that the corporation is merely an alter ego or shell for the shareholders, and disregards the limited liability shield that normally protects shareholders from personal liability. Employee misrepresentation, fraud on customers, and employee negligence are typically not sufficient grounds for piercing the corporate veil.

Under Which Circumstances Will a Court Hold the Shareholders Personally