Monday, January 18, 2016

Religious Beliefs And Piercing Corporate Veils

Some religious folks claim they have a right to intermix their personal religious views with their corporations' commercial activities.

But there is a long standing legal principle that when the owners of a corporation intermix their finances with those of the corporation, the owners lose their limited liability* for the corporation's obligations and debts.

This principle is called "piercing the corporate veil."

It seems to me that the same principle should apply when thew owners of a corporation intermix their personal beliefs with the business of the corporation - deny them the limited liability of stock ownership.
= = = = * A bit of history: before corporations were "invented," one could do business as a sole proprietorship or as a partnership. Under either, as an owner one was personally liable for all of the obligations of the business. (That rule still holds true today.) As the industrial age developed, people were reluctant to take such huge risks necessitated by industrialization. I might be willing to take the business risk of losing the amount I have invested, but I don't want the risks of, say an industrial accident or of the purchase price for a 747 should I own one share in an airline. So the idea of limited liability of owners of a corporation was developed and became part of the laws which govern us. Each shareholder's liability is limited to the "par value" of the shares owned. And the liability is for the obligation for that par value to have been paid into the corporation when the shares were issued. So when I buy a share of a corporation from someone else, as the general rule, I have and can have no financial obligations arising from the corporation's activities. That limited liability is lost when the corporate veil is pierced.