Can officers of a company be sued?
For example, if the corporation does not hold annual meetings or follow the corporate bylaws or if the officers do not keep corporate assets separated from their personal assets, officers can be held personally liable for any corporate debts in a lawsuit.
Can you be personally liable in a corporation?
Corporation. A corporation is an incorporated entity designed to limit the liability of its owners (called shareholders). Generally, shareholders are not personally liable for the debts of the corporation. Shareholders will usually only be on the hook if they cosigned or personally guaranteed the corporation’s debts.
Can a plaintiff Sue an officer of a corporation?
Nevertheless, your business’ officers can be sued. The plaintiff may seek to collect damages beyond corporate assets and hold the officers of your business individually liable, using the legal doctrine known as piercing the corporate veil.
Can a company be sued by an employee?
Suing Corporate Officers and Employees Personally for Misconduct. Typically, officers and employees of corporations or limited liability companies are not personally liable for acts taken in a corporate capacity. However, there are important exceptions.
How can companies protect against lawsuits against corporate officers?
Companies can help protect against lawsuits against corporate officers by ensuring that the corporation is completely independent of personal business matters and being vigilant about wrongdoing by employees and agents of the corporation. Trudie Longren began writing in 2008 for legal publications, including the “American Journal of Criminal Law.”
Who is personally liable if a company is sued?
The “veil” that is the company, in effect, protects them. Therefore, any liabilities that result out of the suing action are borne only by the company. You, as a director, are not personally liable, and your personal assets will, generally speaking, not be available to meet any claim.
Can a corporate officer or employee be sued individually?
There is an additional exception to the protections against individual liability – an officer or employee can be sued individually where the corporation is accused of a tort in which the shareholder/officer/employee personally participated. Tort liability applies regardless of whether the corporate veil is pierced.
Can a corporation be sued in its own name?
In corporate litigation the confusion often arises when an individual or corporate shareholder does not respect the separateness of the corporation in which they own shares. Each corporation is a separate legal entity. It must enter into contracts in its own name and it must sue or be sued in its own name.
Who is the defendant in a corporate lawsuit?
The defendant/respondent corporation has entered into a contract purporting to obligate another corporation to a debt to numerous other corporations (which are not parties to the contract). The plaintiff/petitioner corporation is not a signator to the original contract but is ‘controlled’ by the same individual shareholder.
Can a shareholder sue a board of directors?
The only exception is if shareholders can show that the board of directors engaged in fraud, illegal activities, or were grossly negligent while managing the corporation. If a majority of shareholders disagree with the corporation’s actions, the shareholders can simply take a vote.