Protect shareholder assets

Why should a small corporation outsource its Corporate Secretary function?

If corporate formalities, such as holding regular meetings of shareholders and directors, are not met, a creditor or plaintiff in a lawsuit might be able to "pierce the corporate veil" and impose personal liability on the shareholders of a corporation. This defeats the purpose of having a corporation.

"Another common way to create problems for a business is to fail to acknowledge the corporate status both in terms of disclosure, but also with respect to other formalities such as entering contracts.. . . . Formalities also include 'corporate governance' rules [which] cover things such as board of directors meetings, capitalization requirements and reporting requirements" (Peckinpaugh, 2000). In light of an increasingly litigious environment, more organizations have recognized the need to take steps to protect their interests against veil piercing. . . . "
Holes in the Corporate Veil: Confronting the Myth of Reduced Liability for Small Businesses and Entrepreneurs Under Corporate Forms, by Assistant Prof. Robert J. Lahm, Jr. and Associate Professor Patrick R. Geho, J.D.
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"Piercing initiated by the federal government is effective in almost 60% of the cases it has raised and more than 80% of the time when raised in a regulatory context or in environmental litigation and in fraud cases."
R. Thompson, "Piercing the Corporate Veil: An Empirical Study," 76 Cornell L. Rev. 1036, 1948-49 (1991).

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