San Jose Business Lawyers Blog
“Piercing the corporate veil” is a legal colloquialism used to describe the removal of corporate entity protection to hold shareholders or directors personally liable for corporate debts and liabilities. Limited corporate liability in California, whether through a limited liability company, limited liability partnership, or corporation, is the foundation of the corporate form. Closed corporations are the most susceptible to veil piercing, but corporate protections are difficult to remove absent illegality or serious corporate misconduct.
The Presumption of Limited Liability
Anytime damages are sought directly from a corporate subsidiary, parent company, shareholder, or director, California presumes corporate protection. The plaintiff must overcome this presumption based on the facts of each case. This can be done in two ways: