A corporation with a reasonable debt-to-equity ratio will not have its veil pierced on the grounds of thin capitalization.

Question

Quizplus · Accepted Answer

Inadequate capitalization,called thin capitalization,is proved when capitalization is very small in relation to the nature of the business of the corporation and the risks the business necessarily entails.Thin capitalization defrauds creditors of a corporation.

A Corporation with a Reasonable Debt-To-Equity Ratio Will Not Have