Risk Management: How to fight 'dragons' at private firms
9/15/2010
“There be dragons here” is a designation placed on maps to warn mariners of risks when sailing the seas.
Like the cartographers of old, this article likewise warns business owners of some of the risks or “dragons” that are always present. However, unlike the ancient cartographers, I also offer ways to fight the dragons to both closely held corporations and limited liability companies and their shareholders and members.
Litigation of business disputes today is expensive and always comes at the most inopportune times. You may not be able to avoid it completely but there are some common areas of risk of which you should beware. Learn how to minimize the cost and disruption associated with litigation and the dragons discussed below.
Piercing-the-corporate-veil Dragon. The general rule is that a corporation is a separate and distinct entity from its shareholders; the shareholders are not responsible for the debts and obligations of the corporation. However, under certain circumstances a court may hold the shareholders of a corporation responsible for the obligations of the corporation. When this happens, the court is said to pierce the corporation’s veil of limited liability.
Read the rest of article by Tom Dougherty which appeared in the September 2010 Upsize Minnesota magazine.
If you have questions about risk management issues, please contact Tom Dougherty at tdougherty@lommen.com or 612-336-9330.