By Adam D. Page, Esq.
Companies doing business in states other than where the company is incorporated should be aware that there can be differences between the various business laws between and among various states. Generally, shareholders of a corporation are not liable for the debts and obligations of the corporation, except in limited instances where a creditor can “pierce the corporate veil” and proceed against the shareholders.
For instance, New York’s Business Corporation Law has included a provision since the 1800s that shareholders of New York corporations, in certain circumstances, are liable for the debts and obligations of the corporation. This past January, the New York State Assembly expanded that provision to all corporations doing business in New York, whether incorporated in New York or in any other state, such as Delaware or Massachusetts.
Before deciding where to incorporate or do business, a review of the laws that could impose unlimited liability on the company’s owners is prudent. Please contact us if you are contemplating incorporating or conducting business through a limited liability entity.
Adam D. Page is the Managing Director of the Corporate Department of Finneran & Nicholson, P.C. He can be reached at (978) 462-1514.