4 ms·

This exists and is called "piercing the corporate veil", but it is only applied in circumstances of extreme and blatant criminality by the corporation, at least

by fmajid 1y ago

This exists and is called "piercing the corporate veil", but it is only applied in circumstances of extreme and blatant criminality by the corporation, at least in the US. https://en.wikipedia.org/wiki/Piercing_the_corporate_veil https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

bluefirebrand 1y ago
I think what OP is saying is that the corporate veil should not exist at all Executives should be held accountable for making decisions or approving company direction that break laws I know there's a lot of complexity here with how businesses operate But it is really messed up that individuals can enrich themselves an incredible amount by directing companies to break laws, and often suffer zero consequences for that because the corporate veil is such a strong mechanism
- gruez 1y ago
  >Executives should be held accountable for making decisions or approving company direction that break laws Isn't that already the case? If an executive ordered a hit on someone, that doesn't become magically legal because he was doing it on behalf of the company.
  - bluefirebrand 1y ago
    Ordering a hit is a pretty extreme example that probably would pierce the corporate veil But also the problem isn't that it becomes "magically legal",the problem is that the corporate veil means that if a company takes illegal actions then often only the company is held accountable, instead of the people responsible for directing the company to take illegal actions And it takes a high bar (like ordering a hit) to make the legal system try and hold individuals accountable for company actions I am arguing that is absurd. I think individuals inside companies take advantage of this often to get away with illegal shit to enrich themselves at the company's expense
    - fmajid 1y ago
      Not as far-fetched as you'd think: https://en.wikipedia.org/wiki/EBay_stalking_scandal https://en.wikipedia.org/wiki/EBay_stalking_scandal Note that while minions went to jail, the CEO came out of this scot-free.
      - gruez 1y ago
        >Note that while minions went to jail, the CEO came out of this scot-free. Because it was determined that the minions committed the crime and that the CEO didn't know about it? >The CEO Wenig's messages were deemed "inappropriate" by eBay, but eBay's internal investigation concluded that the CEO did not know about the stalking and harassment activities.
        nkrisc 1y ago
        > but eBay's internal investigation concluded that the CEO did not know about the stalking and harassment activities. I can't imagine them concluding otherwise.
        gruez 1y ago
        I'm not arguing he's been proven innocent, just that he hasn't been proven guilty. Therefore it shouldn't be outrageous that he got away "scott-free".
        rendaw 1y ago
        The argument in this thread is that he's responsible for the actions of his subordinates and therefore deserves some of the punishment, not that he's directly culpable in the crime and therefore should receive punishment. There have been many situations where corporate incentives or structures, plus the innate power imbalance, pressure low level employees to commit crimes that benefit the corporation and the fact that employers are not responsible for the actions of their employees when not directly ordered means that those structures aren't fixed.
  - crote 1y ago
    In practice it often looks more like the case of the Ford Pinto: the company knew that the design was flawed and could result in the fuel tank exploding in a fireball during a rear-end collision, but the $9 it would cost to fix the issue was considered too expensive. Convicting an executive for explicitly ordering a hit on a specific person? Fairly easy. Convicting an executive for letting several anonymous people die in order to increase profits? Virtually unheard of.
- adrr 1y ago
  If an exec breaks the law, they can and should be prosecuted. Whats weird is filing criminal charges against a company, it’s not like the company can be incarcerated. There are ways to impose fines/injuctions via the civil court system.
  - BrenBarn 1y ago
    More and more I think part of the problem is the burden of proof. It's too easy for executives to hide behind plausible deniability. There needs to be a presumption of individual executive guilt if bad conduct by the company is found to have occurred. In other words, if it happens on your watch, you are guilty of it. Another way forward is that the presumption of innocence should be a sliding scale based on the amount a person has benefited. So if you made $100 million from the company, the bar is very low; you don't get to make $100 million unless everything is absolutely squeaky clean. If you were just an average joe taking home a $50k paycheck, you get much more benefit of doubt. So it's basically like making a lot of money off any endeavor is itself something that requires extra-good conduct; the default position is no one gets to make a lot of money at all.
    - adrr 1y ago
      If execs are willfully blind to criminal activity done by employees, they can and should prosecuted. Problem is they have too much clout and money that they won't get prosecuted.
- nico 1y ago
  The corporate veil is meant to protect the shareholders, not the executive/employees In theory at least, usually the CEO is legally responsible for the actions of the corporation. And all employees are accountable for their own actions In practice we’ve seen that, at least big corporations, and their executives, get away with just paying fines and settling lawsuits
  - throwawaymaths 1y ago
    would be hilarious to sentence a company to, say, 4000 years in prison and divvy out punishment proportional to the ownership stake. like, this guy owning a few hundred shares on TD ameritrade must report to jail for 38 hours next week. bring a book.
    - smegger001 1y ago
      We would probably see much more law abiding companies as the next shareholder meeting would involve an entirely new board of directors (the previous still serving time) and all of the shareholders themselves having spent time in prison be it hours or days or weeks would not permit such behavior in future.
      - opello 1y ago
        An entirely new section to the shareholder meeting agenda: criminal exposure. I wonder if we would also have mandatory market rate buy-back of securities for when a shareholder can't find a buyer but also no longer wants to bear the risk of the corporation's behavior? Similarly, mutual funds might refuse to hold securities that expose them to criminal punishment.
      - SR2Z 1y ago
        Companies like Uber that work in regulated industries would find it nearly impossible to operate. Healthcare companies - like the ones that manufacturer pacemakers or implants - would find it basically impossible to raise money. Ditto for aerospace, construction, and tool companies. Why would investors want to get involved when they're one lawsuit away from going personally broke? Limited liability is a good idea and shareholders really shouldn't be held responsible for the actions of the C-suite.
- analog31 1y ago
  To clarify, I agree with the post above yours. There should be a corporate veil, but it should be pierce-able in extreme cases. Maybe it's already that way, but doesn't seem to be employed all that often. My reason for the corporate veil is essentially a social theory, that society benefits from the higher level of investment that is made possible by letting people shelter their personal assets to a reasonable extent. It's essentially a government manipulation of the economy.
  - jmalicki 1y ago
    It's regularly pierced in many jurisdictions for failure to pay wages. This most often happens with small businesses.
deleted 1y ago
[deleted]

by fmajid 1y ago

bluefirebrand 1y ago

I think what OP is saying is that the corporate veil should not exist at all Executives should be held accountable for making decisions or approving company direction that break laws I know there's a lot of complexity here with how businesses operate But it is really messed up that individuals can enrich themselves an incredible amount by directing companies to break laws, and often suffer zero consequences for that because the corporate veil is such a strong mechanism

gruez 1y ago
>Executives should be held accountable for making decisions or approving company direction that break laws Isn't that already the case? If an executive ordered a hit on someone, that doesn't become magically legal because he was doing it on behalf of the company.
- bluefirebrand 1y ago
  Ordering a hit is a pretty extreme example that probably would pierce the corporate veil But also the problem isn't that it becomes "magically legal",the problem is that the corporate veil means that if a company takes illegal actions then often only the company is held accountable, instead of the people responsible for directing the company to take illegal actions And it takes a high bar (like ordering a hit) to make the legal system try and hold individuals accountable for company actions I am arguing that is absurd. I think individuals inside companies take advantage of this often to get away with illegal shit to enrich themselves at the company's expense
  - fmajid 1y ago
    Not as far-fetched as you'd think: https://en.wikipedia.org/wiki/EBay_stalking_scandal https://en.wikipedia.org/wiki/EBay_stalking_scandal Note that while minions went to jail, the CEO came out of this scot-free.
    - gruez 1y ago
      >Note that while minions went to jail, the CEO came out of this scot-free. Because it was determined that the minions committed the crime and that the CEO didn't know about it? >The CEO Wenig's messages were deemed "inappropriate" by eBay, but eBay's internal investigation concluded that the CEO did not know about the stalking and harassment activities.
      - nkrisc 1y ago
        > but eBay's internal investigation concluded that the CEO did not know about the stalking and harassment activities. I can't imagine them concluding otherwise.
        gruez 1y ago
        I'm not arguing he's been proven innocent, just that he hasn't been proven guilty. Therefore it shouldn't be outrageous that he got away "scott-free".
        rendaw 1y ago
        The argument in this thread is that he's responsible for the actions of his subordinates and therefore deserves some of the punishment, not that he's directly culpable in the crime and therefore should receive punishment. There have been many situations where corporate incentives or structures, plus the innate power imbalance, pressure low level employees to commit crimes that benefit the corporation and the fact that employers are not responsible for the actions of their employees when not directly ordered means that those structures aren't fixed.
- crote 1y ago
  In practice it often looks more like the case of the Ford Pinto: the company knew that the design was flawed and could result in the fuel tank exploding in a fireball during a rear-end collision, but the $9 it would cost to fix the issue was considered too expensive. Convicting an executive for explicitly ordering a hit on a specific person? Fairly easy. Convicting an executive for letting several anonymous people die in order to increase profits? Virtually unheard of.
adrr 1y ago
If an exec breaks the law, they can and should be prosecuted. Whats weird is filing criminal charges against a company, it’s not like the company can be incarcerated. There are ways to impose fines/injuctions via the civil court system.
- BrenBarn 1y ago
  More and more I think part of the problem is the burden of proof. It's too easy for executives to hide behind plausible deniability. There needs to be a presumption of individual executive guilt if bad conduct by the company is found to have occurred. In other words, if it happens on your watch, you are guilty of it. Another way forward is that the presumption of innocence should be a sliding scale based on the amount a person has benefited. So if you made $100 million from the company, the bar is very low; you don't get to make $100 million unless everything is absolutely squeaky clean. If you were just an average joe taking home a $50k paycheck, you get much more benefit of doubt. So it's basically like making a lot of money off any endeavor is itself something that requires extra-good conduct; the default position is no one gets to make a lot of money at all.
  - adrr 1y ago
    If execs are willfully blind to criminal activity done by employees, they can and should prosecuted. Problem is they have too much clout and money that they won't get prosecuted.
nico 1y ago
The corporate veil is meant to protect the shareholders, not the executive/employees In theory at least, usually the CEO is legally responsible for the actions of the corporation. And all employees are accountable for their own actions In practice we’ve seen that, at least big corporations, and their executives, get away with just paying fines and settling lawsuits
- throwawaymaths 1y ago
  would be hilarious to sentence a company to, say, 4000 years in prison and divvy out punishment proportional to the ownership stake. like, this guy owning a few hundred shares on TD ameritrade must report to jail for 38 hours next week. bring a book.
  - smegger001 1y ago
    We would probably see much more law abiding companies as the next shareholder meeting would involve an entirely new board of directors (the previous still serving time) and all of the shareholders themselves having spent time in prison be it hours or days or weeks would not permit such behavior in future.
    - opello 1y ago
      An entirely new section to the shareholder meeting agenda: criminal exposure. I wonder if we would also have mandatory market rate buy-back of securities for when a shareholder can't find a buyer but also no longer wants to bear the risk of the corporation's behavior? Similarly, mutual funds might refuse to hold securities that expose them to criminal punishment.
    - SR2Z 1y ago
      Companies like Uber that work in regulated industries would find it nearly impossible to operate. Healthcare companies - like the ones that manufacturer pacemakers or implants - would find it basically impossible to raise money. Ditto for aerospace, construction, and tool companies. Why would investors want to get involved when they're one lawsuit away from going personally broke? Limited liability is a good idea and shareholders really shouldn't be held responsible for the actions of the C-suite.
analog31 1y ago
To clarify, I agree with the post above yours. There should be a corporate veil, but it should be pierce-able in extreme cases. Maybe it's already that way, but doesn't seem to be employed all that often. My reason for the corporate veil is essentially a social theory, that society benefits from the higher level of investment that is made possible by letting people shelter their personal assets to a reasonable extent. It's essentially a government manipulation of the economy.
- jmalicki 1y ago
  It's regularly pierced in many jurisdictions for failure to pay wages. This most often happens with small businesses.

deleted 1y ago

[deleted]