| ... And have your shareholders shouldering the liability | | | | shareholders and regular annual meetings of its Board |
| for debts and other obligations. | | | | of Directors. These meetings may become actual |
| If you are a businessperson, it is very important to | | | | meetings wherein the quorum required is met, they |
| have a solid corporate structure in order that your | | | | can also be held based "on paper", or the "Unanimous |
| business' shareholders assets are protected well | | | | Written Consent in Lieu of Meeting" is drafted and |
| enough from the corporations' debts and other | | | | enforced on all persons who should be present for |
| liabilities. This situation is possible if your corporation is | | | | that particular meeting. |
| being treated as a different or separate entity from | | | | Moreover, any kind of extraordinary transactions |
| its owners. It should also observe the formalities of | | | | need to be clearly documented through a |
| corporate ethics as required by the laws governing it. | | | | shareholders or directors' "Special Meeting." In every |
| A distinction must be solidly set between the owners | | | | time these meetings have taken place, the written |
| or shareholders of the business and the corporation, | | | | consents or minutes of the proceedings need to be |
| otherwise a creditor in pursuit of the payments for | | | | transcribed on its appropriate place in your company's |
| debts and obligations may be able to ignore the | | | | corporate book. It should be continuously maintained |
| whole entity of the corporation and rather go after | | | | as long as the corporation exists. |
| the assets of individual shareholders. | | | | - Shareholders of the corporation must invest |
| If your corporation start facing this kind of pursuit | | | | sufficient amounts of capital depending on the nature |
| from creditors, then it can be considered that, your | | | | of the business. They must not just lend the |
| corporate veil has been disregarded or pierced. Upon | | | | company with their money. |
| the occurrence of this, your shareholders become | | | | If ever a court finds out that the company has no |
| personally liable for the debts and other obligations | | | | sufficient capital to operate, it may permit the |
| being sought by creditors. | | | | creditor to look into the company and hold its |
| Consequently, the law will then impose the liability | | | | owners liable for the debts and obligations made by |
| against the corporation's shareholders instead of the | | | | the company. |
| corporation itself since their entities were not | | | | Remember, the courts have long established that |
| established separately. The personal liability that is | | | | companies with inadequate capitalization fund may be |
| imposed against the shareholders would have a likely | | | | considered as "shams." |
| undesirable result on their personalities, though. | | | | - Maintain your corporation's identity separate from |
| In order for your business to avoid this inconvenience | | | | you and other owners or shareholders. Do not use |
| and the undesirable outcome from it, here are the | | | | the assets of your corporation, as they are the |
| following things to keep in mind, according to the | | | | same assets as yours or execute documents |
| general principles of the corporate laws: | | | | indicating yourself as a corporation officer. Avoid |
| - Preserve your company's corporate records in | | | | placing the income of the corporation into its account. |
| strictly professional manner. If you are incorporated in | | | | Do not mingle the shareholders' assets with that of |
| California, then make sure that the way your | | | | the corporation's assets. Always use the company's |
| significant corporate records are kept in compliance | | | | full name including the "Inc." |
| with the state of California Corporation's Code. | | | | - File the corporation's tax returns as required by the |
| If you fail to comply strictly with these codes, | | | | Federal and state governments. Your corporate |
| chances are if your case goes to trial, the courts | | | | attorney can help you also in completing the |
| may be given a major reason to consider whether | | | | Secretary of State's form that need to be filled up |
| your corporate veil could be pierced. | | | | with information then mailed in, called the "Statement |
| According to the laws, it is compulsory for the | | | | of Information. |
| corporation to hold regular annual meetings of its | | | | |