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I see it quite regularly where laymen create an LLC, find themselves personally liable for company actions/debts and then can not wrap their mind around how the
by will_brown 10y ago
I see it quite regularly where laymen create an LLC, find themselves personally liable for company actions/debts and then can not wrap their mind around how they could be liable for an entity that is literally called a limited liability company.
It actually reminds me of the people who take the opinion that in the magical world of the DAO no one can be liable for anything because by definition if an action occurred, then it is legal because it was contractually agreed to.
It's an important lesson to learn that corporate veils can be pierced and contracts can be voided (i.e. unfair; deceptive; fraud in the inducment; illegal; etc...).
- tamana 10y agoThe word "limited liability" refers to the fact that the owners are liability only for an amount up to their investment, within the scope of the corporation. The limit refers to the investment, not the fact that criminal activity is still legal exposure. Obviously an owner cannot sign away liability for individual criminal activity, same as with any corporation.
- will_brown 10y agoAnd while you have stated the rule, what people don't understand is the exceptions in which members/owners of LLCs can in fact be personally liable above and beyond their investment in the entity.