As a business owner in New York, you may face legal situations that require a high degree of specialized knowledge. Dealing with company structure, regulations, and legal liabilities falls within the realm of business law. One of the most complex areas of business law is “piercing the corporate veil”. This legal term refers to a situation where an individual’s legal rights are being infringed by a corporation and that individual can no longer remain protected by the corporate veil. As a business owner with a presence in New York, you should stay informed about “piercing the corporate veil” and the complex legal implications it can bring.

What Is Piercing the Corporate Veil?

In the United States, the legal distinction between a corporation and its shareholders is well-defined and enforced. Corporations are considered “separate legal entities”, meaning they have their own rights and responsibilities, distinct from their shareholders. This legal distinction is known as the “corporate veil”. Usually, the corporate veil protects shareholders from personal liability for any actions taken by the corporation. However, if a court were to “pierce the corporate veil”, then the corporate veil would no longer protect the shareholders – they would be held personally liable for any actions taken by the corporation.

When Could the Corporate Veil Be Pierced?

In order for a corporate veil to be pierced, it must be proven that the corporation was formed solely for the purpose of evading responsibilities and/or liabilities. This can include situations such as fraud, misusing corporate assets for personal benefit, or failing to follow corporate regulations. A court will consider each case individually, and must be convinced that the corporation has been misused for the personal benefit of its shareholders. If sufficient evidence is presented, then a court may order the corporate veil to be pierced, and the personal assets of the shareholders could be put at risk.

The Corporate Veil Is Not Always Pierced

It must be noted that the corporate veil can be pierced under very specific circumstances, and it requires a significant amount of proof of wrongdoing before a court will make a ruling. Generally speaking, courts tend to be reluctant to pierce the corporate veil as it undermines the corporate structure – a structure that is so widely used and beneficial for businesses of all sizes. However, if the evidence is concrete, then a court may be willing to pierce the corporate veil and risk the personal assets of the individual shareholders.

To Prevent Piercing the Corporate Veil

Perhaps the best course of action as a business owner is to take steps to ensure that the corporate veil is not pierced by any legal actions. In order to do so, you must take all necessary measures to ensure the corporation is in compliance with legal regulations, such as filing your taxes on time and accurately, making sure shareholders are not misusing corporate assets, and so on. Additionally, you should hire an experienced business lawyer to provide the necessary legal counsel. By collaborating with a competent business lawyer, you can rest assured that any legal liabilities incurred by your business will remain properly addressed.

Finding the Right New York Business Lawyers

If you are looking for legal help that specifically understands New York regulations, consider UpCounsel. UpCounsel is a platform that connects busy professionals with experienced business lawyers. Their lawyers have an average of 14 years of experience, and you can consult with them on short or long-term engagements. With UpCounsel, you get access to lawyers who possess the specialized knowledge you need to ensure your business remains compliant with all local regulations.

Last ideas

Piercing the corporate veil can have serious financial repercussions for business owners in New York. By familiarizing yourself with the legal implications, and by finding the right business lawyers, you can ensure your business complies with all regulations and your personal assets remain secure.


Piercing the Corporate Veil,

New York Business Lawyer,

Corporate Compliance