Personal Liability for Members of Corporation

The video discusses potential liabilities for members of a corporation, focusing on shareholders, directors, and officers. Shareholders generally have limited liability, but in closely held corporations, they may face personal liability if corporate formalities are not followed, a concept known as piercing the corporate veil. Directors are protected by the business judgment rule unless they engage in intentional or reckless conduct. Officers may also face personal liability, but corporations often indemnify them, except in cases of intentional or reckless actions.

What is the term used when a court holds shareholders personally liable for corporate debts due to failure in adhering to corporate formalities?

• Piercing the Veil

• Corporate Liability

• Corporate Shielding

• Shareholder Protection

Under what condition can directors be personally liable for their decisions in a corporation?

• If they act with intentional or reckless disregard for the law

• If they fail to attend board meetings

• If they disagree with other directors

• If they make a decision that results in financial loss

What rule protects directors from liability for decisions made in good faith, even if they are negligent?

• Shareholder Indemnity Rule

• Business Judgment Rule

• Director Liability Rule

• Corporate Protection Rule

What is a common practice by corporations to protect officers from personal liability for negligent actions?

• Officer Indemnification

• Corporate Shielding

• Personal Insurance

• Liability Waiver

In what scenario might an officer be personally liable despite corporate indemnification?

• For any decision that results in a loss

• For intentional or reckless conduct

• For failing to meet sales targets

• For resigning from their position