Piercing the Corporate Veil
Business Associations · Lesson 04
Piercing the Corporate Veil
這一課問的是：法院應否「揭開公司面紗」使股東對公司債務負個人責任？
ActorActObjectStandardConsequence
Visual Scene · the picture in your head
Issue. Should the court pierce the corporate veil to hold shareholders personally liable for corporate obligations?
這一課問的是：法院應否「揭開公司面紗」使股東對公司債務負個人責任？
Core Terminology · 7 must-know
Tap a card to flip and reveal the meaning.
veil piercing
Tap to see meaning
Disregarding corporate entity to reach shareholders.
揭開面紗。
alter ego
Tap to see meaning
Corporation is mere instrumentality of shareholder.
變身。
undercapitalization
Tap to see meaning
Inadequate capital for foreseeable obligations.
資本不足。
commingling
Tap to see meaning
Mixing personal and corporate funds.
混同。
disregarding formalities
Tap to see meaning
Failure to observe corporate procedures.
不遵手續。
fraud or injustice
Tap to see meaning
Used to perpetrate fraud or injustice.
詐欺或不公。
reverse veil piercing
Tap to see meaning
Reaching corporate assets for shareholder debt.
反向揭開。
Issue · what this lesson is really about
Should the court pierce the corporate veil to hold shareholders personally liable for corporate obligations?
這一課問的是：法院應否「揭開公司面紗」使股東對公司債務負個人責任？
Trigger words & phrases that should flag this issue:
alter egoundercapitalizationcommingledominationsham
Expression Bank · how lawyers actually say it
Six function → sentence patterns. Use these in essay applications.
| Function | English sentence | 中文 |
|---|---|---|
| State test | Veil piercing requires (1) unity of interest making corporation alter ego, AND (2) unjust result if corporate form respected. | 揭開面紗二要件。 |
| List factors | Factors: undercapitalization, commingling, disregarding formalities, fraud or sham. | 因素：資本不足、混同、不遵手續、詐欺。 |
| Apply contract vs tort | Tort plaintiffs (involuntary creditors) often have easier pierce than contract plaintiffs. | 侵權受害人（非自願債權人）通常較易揭開。 |
Rule Sentence · the workhorse
A court may pierce the corporate veil to hold shareholders personally liable where (1) there is unity of interest such that the corporation is the alter ego of the shareholder, and (2) recognizing the corporate form would sanction fraud or produce an unjust result.
Sentence Anatomy · 5 roles, 5 colors
Every rule sentence breaks into five visual roles.
Actor 行為人plaintiff (often creditor)原告（通常為債權人）
Act 行為seeking to pierce veil請求揭開面紗
Object 對象shareholder股東
Standard 法律標準alter ego + injustice變身 + 不公
Consequence 後果personal liability個人責任
Casebook Snapshot · a real American case
Walkovszky v. Carlton
Holding. Forming separate corporations for each taxi cab, each carrying only minimum insurance, did not by itself justify piercing the corporate veil. Piercing requires more than undercapitalization — typically domination plus fraud or injustice.
Why it matters. Walkovszky shows the high bar for piercing: undercapitalization alone is generally insufficient.
Walkovszky：單純資本不足不足揭開面紗。
Common Mistakes · what trips students
✗ veil piercing 適用於 LLCs。
✓ LLCs may also be pierced.
LLCs 亦可揭開。
✗ undercapitalization 單因子充分。
✓ Usually requires multiple factors.
通常須多重因素。
Mini IRAC · build the Application
Issue. Should the court pierce the corporate veil when D, the sole shareholder, ignored corporate formalities, commingled $200,000 of personal and corporate funds, and used the corporation to avoid creditors?
Rule. A court may pierce the corporate veil where the shareholder so disregarded the corporate form that the corporation is the alter ego and recognizing the form would produce injustice.
Application (model). D treated the corporation's bank account as a personal account, made no distinction between personal and corporate funds, ignored corporate formalities entirely, and used the corporate shell to dodge creditors. Because veil piercing requires unity of interest creating alter-ego status plus an unjust result, the fact that D's pervasive commingling, disregard of formalities, and use of the corporation to evade creditors creates near-total identity between D and the corporation means both prongs of the test are satisfied.
Pick the right element for each blank:
g1.
g2.
g3.
Conclusion. Therefore, the court should pierce the corporate veil and hold D personally liable.
MBE Check · multiple choice
A corporation with $10,000 in capital signed a $5 million construction contract knowing it could never perform. The sole shareholder personally guaranteed nothing. The shareholder used the corporate funds for a personal vacation. May the creditor pierce?
Practice Drill · tap to build the rule
Drop the chips here in correct order:
Tap chips to add → tap chips in the target to remove: