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PIERCING THE CORPORATE VEIL
Nevada has long recognized that although corporations and LLCs are generally to be treated as separate legal entities, the remedy of "piercing the corporate veil" may be available to a plaintiff in circumstances where it appears that the corporation or LLC is acting as the alter ego of a controlling individual. Third parties have to show personal wrongful conduct on the part of a company official or director to hold them personally responsible; extra-corporate actions which would support application of the legal doctrine known as "piercing the corporate veil."
Some of the elements for finding an alter ego are:
Further, the following factors, though not conclusive, may indicate the existence of an alter ego relationship allowing for one to "pierce the corporate veil" and go after a member of a company personally for the debts and/or liability of that company:
However, the Nevada Supreme Court has emphasized that there is no litmus test for determining when the corporate fiction should be disregarded; the result depends on the circumstances of each case. Nevertheless, in order to maintain personal limited liability, it is essential these described actions be avoided. As such, certain steps may be made to avoid a "piercing of the corporate veil." These are, but are not limited to, the following:
In the end, everyone operating a business should think about forming a separate legal entity to conduct their business. The attorneys at our firm can consult with you to provide the legal advice, guidance and expertise necessary to assist you with forming the right legal entity to suit your needs, and help you avoid the legal trappings discussed above.
For more information contact us at email@example.com.
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