Innovation Pharmaceuticals Inc (IPIX)

[kfcyahoo]

Interesting read, and it’s shorter than a book.

https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html

A portion of the article is below.



Factors Courts Consider in Piercing the Corporate Veil

The most common factors that courts consider in determining whether to pierce the corporate veil are:

whether the corporation or LLC engaged in fraudulent behavior
whether the corporation or LLC failed to follow corporate formalities
whether the corporation or LLC was inadequately capitalized (if the corporation never had enough funds to operate, it was not really a separate entity that could stand on its own), and
whether one person or a small group of closely related people were in complete control of the corporation or LLC.
Some corporations and LLCs are especially vulnerable when these factors are considered, simply because of their size and business practices. Closely held companies are more susceptible to losing limited liability status than large, publicly traded corporations. There are several reasons for this.

Failure to follow corporate formalities. Small corporations are less likely than their larger counterparts to observe corporate formalities, which makes them more vulnerable to a piercing of their corporate veil. To avoid trouble, it's best to play it safe. It's important for small corporations and LLCs to comply with the rules governing formation and maintenance of a corporation, including:

holding annual meetings of directors and shareholders or members
keeping accurate, detailed records (called "minutes") of important decisions that are made at the meetings
adopting company bylaws, and
making sure that officers and agents abide by those bylaws.