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> corporate veil were pierced This refers only to going after shareholders. Employees can always be held responsible for their actions.

by coryrc 6y ago

missedthecue 6y ago
I don't think there has ever been a case in modern history where shareholders have been criminally tried for a crime committed by the company.
- doctor_eval 6y ago
  That’s the point of limited liability companies. Shareholders are able to invest capital without needing to invest anything else (like time) and without worrying that they will go to jail for something the company does, with or without the consent of the shareholders. This is hugely important to VC funding and to the entire share market. Imagine buying shares on the NYSE and next week you’re in prison!! So that is sensible I think. The flip side is that shareholders don’t get to make any material decisions about running the company; that’s the job of the directors (who might not be shareholders). Directors are, in theory, legally liable for the actions of the company they manage. All this would be fine with me, and directors certainly have gone to jail for crimes committed by their company, but it’s incredibly rare, and in Australia where I live, is generally related to trading insolvent, tax avoidance, or other clear and simple legal issues. But go ahead and let your company illegally blow up irreplaceable ancient cave paintings in the outback, and you’ll be fine. In fact, in Australia at least, the corporate regulator ASIC is so toothless that there is no straightforward way to enforce director’s breaches of company constitutions or other governance agreements other than directly with lawyers. This makes enforcement of the governing documents of a company (the documents that the shareholders sign up to) incredibly expensive and intimidating. Even clear breaches of the Corporations Act, the governing law of business in Australia, must be dealt with through civil law. So if you are a minority shareholder in an Australian Pty Ltd company and the directors decide to break their agreements with you - say an agreement to use green energy or to use ethically sourced labour - you’re screwed unless you sue them. If you’re a small time investor or if a significant portion of your wealth is invested in that company, you’re shit out of luck. The directors can do what they like. That’s messed up, because it means that directors can get away with almost anything, even if the minority shareholders disapprove, and there is zero recourse in the justice system. I presume that, as with many things legal, Australia follows the US in this regard, but I don’t know this for certain.
  - gambiting 6y ago
    >>Imagine buying shares on the NYSE and next week you’re in prison!! So that is sensible I think. If you give your neighbour some money and he goes and buys a gun with it and kills someone, you can be held liable in that scenario(depending on the intent, on how well you knew what he was going to do etc etc etc). If you give a company money(investment) and they go and destroy the Amazon illegaly.....your hands are clean? I mean, obviously I understand what you mean. I own some shares myself. But there has to be some middle ground between "100% responsibily, straight to jail" and "give money to people who do bad things, have 0 responsibility".
    - TeMPOraL 6y ago
      I'm assuming - hoping - that if could be demonstrated that a LLC was open about trying to engage in illegal practices, and the investor knew that before investing, then the investor could be charged with facilitating crime.
      - sokoloff 6y ago
        Lots of companies operate in a grey area. PayPal, Uber/Lyft, AirBnB, and others were all open about “disrupting” which is code for breaking regulations that some people don’t agree with. All four of those companies have made my life better and I’m glad someone invested to make them happen.
        iudqnolq 6y ago
        I'm sure people say the same about drugs
        TeMPOraL 6y ago
        It was entirely possible to achieve the same disruption without breaking laws, so think instead of the opportunity cost - the damage done to the markets, granting wealth to people who demonstrated sociopathic tendencies and blatant disregard for the law, allowing those people to follow their principles and abuse their workers/"partners" at scale, and erosion of public trust in local governance. All of which could perhaps be avoided if the investors were afraid to be associated with such scummy business practices, and instead pressured aforementioned startups to stay fully above board while realizing their vision.

> corporate veil were pierced This refers only to going after shareholders. Employees can always be held responsible for their actions.

by coryrc 6y ago

> corporate veil were pierced This refers only to going after shareholders. Employees can always be held responsible for their actions.

missedthecue 6y ago

I don't think there has ever been a case in modern history where shareholders have been criminally tried for a crime committed by the company.

doctor_eval 6y ago
That’s the point of limited liability companies. Shareholders are able to invest capital without needing to invest anything else (like time) and without worrying that they will go to jail for something the company does, with or without the consent of the shareholders. This is hugely important to VC funding and to the entire share market. Imagine buying shares on the NYSE and next week you’re in prison!! So that is sensible I think. The flip side is that shareholders don’t get to make any material decisions about running the company; that’s the job of the directors (who might not be shareholders). Directors are, in theory, legally liable for the actions of the company they manage. All this would be fine with me, and directors certainly have gone to jail for crimes committed by their company, but it’s incredibly rare, and in Australia where I live, is generally related to trading insolvent, tax avoidance, or other clear and simple legal issues. But go ahead and let your company illegally blow up irreplaceable ancient cave paintings in the outback, and you’ll be fine. In fact, in Australia at least, the corporate regulator ASIC is so toothless that there is no straightforward way to enforce director’s breaches of company constitutions or other governance agreements other than directly with lawyers. This makes enforcement of the governing documents of a company (the documents that the shareholders sign up to) incredibly expensive and intimidating. Even clear breaches of the Corporations Act, the governing law of business in Australia, must be dealt with through civil law. So if you are a minority shareholder in an Australian Pty Ltd company and the directors decide to break their agreements with you - say an agreement to use green energy or to use ethically sourced labour - you’re screwed unless you sue them. If you’re a small time investor or if a significant portion of your wealth is invested in that company, you’re shit out of luck. The directors can do what they like. That’s messed up, because it means that directors can get away with almost anything, even if the minority shareholders disapprove, and there is zero recourse in the justice system. I presume that, as with many things legal, Australia follows the US in this regard, but I don’t know this for certain.
- gambiting 6y ago
  >>Imagine buying shares on the NYSE and next week you’re in prison!! So that is sensible I think. If you give your neighbour some money and he goes and buys a gun with it and kills someone, you can be held liable in that scenario(depending on the intent, on how well you knew what he was going to do etc etc etc). If you give a company money(investment) and they go and destroy the Amazon illegaly.....your hands are clean? I mean, obviously I understand what you mean. I own some shares myself. But there has to be some middle ground between "100% responsibily, straight to jail" and "give money to people who do bad things, have 0 responsibility".
  - TeMPOraL 6y ago
    I'm assuming - hoping - that if could be demonstrated that a LLC was open about trying to engage in illegal practices, and the investor knew that before investing, then the investor could be charged with facilitating crime.
    - sokoloff 6y ago
      Lots of companies operate in a grey area. PayPal, Uber/Lyft, AirBnB, and others were all open about “disrupting” which is code for breaking regulations that some people don’t agree with. All four of those companies have made my life better and I’m glad someone invested to make them happen.
      - iudqnolq 6y ago
        I'm sure people say the same about drugs
      - TeMPOraL 6y ago
        It was entirely possible to achieve the same disruption without breaking laws, so think instead of the opportunity cost - the damage done to the markets, granting wealth to people who demonstrated sociopathic tendencies and blatant disregard for the law, allowing those people to follow their principles and abuse their workers/"partners" at scale, and erosion of public trust in local governance. All of which could perhaps be avoided if the investors were afraid to be associated with such scummy business practices, and instead pressured aforementioned startups to stay fully above board while realizing their vision.