Under what circumstances will a court hold shareholders personally responsible for a corporation's actions?
A) employee misrepresentation of a product
B) fraud on customers
C) employee negligence
D) fraud on creditors

Question

Quizplus · Accepted Answer

Shareholders may be held personally responsible for a corporation's actions if they have engaged in fraud on creditors. This is because creditors have the right to rely on the financial integrity of the corporation and its shareholders. In cases of fraud, the court may pierce the corporate veil and hold the shareholders personally liable for the debts of the corporation. Employee misrepresentation of a product, fraud on customers, and employee negligence are typically not grounds for holding shareholders personally responsible.

Under What Circumstances Will a Court Hold Shareholders Personally Responsible