Business Law Assignment Example | Topics and Well Written Essays - 750 words - 1

Business Law - Assignment Example In order to protect one’s self from the risk of increased personal liability outside the realms of the business, it is important to avoid situations that lead to the piercing of the corporate veil. These situations are broadly, three in number. First, piercing of the corporate veil is attributed to the establishment of a compliant corporation that fulfills the statutory schemes like social security and compensation for the unemployed. Secondly, fraudulent behavior like having a third party enter a contact believing that the corporate debt is in fact personal liability forces the courts to impose liability on the shareholders to legitimize the action. Lastly, inequitable power and asset transfer at the time of bankruptcy or financial distress to support opportunism also encourages the legal system to disregard the corporate nature of the firm to include personal liability (Macey and Mitts). It is imperative to comply by the legal system if the country of operations whether the business ownership is LLP or LLC. Limited liability partnership is the safest form of partnership that restricts the personal liability of the shareholders to a great extent. The board of directors of every firm is entrusted by the shareholders to work in the best interests of the company. As the property of the corporation is an asset whose sale or exchange can greatly alter a business’s operations and profitability, it is imperative that the board of directors mutually agree on the feasibility of the action before entering any contract (Kansasstatutes.lesterama.org). As in the case if Grocery Corp. even if the president was fulfilling his fiduciary duties to act in the best interest of the business, she overlooked the important procedure of gaining the consent of the complete board before entering a contract for a major sale of the corporation’s assets. Section 3a (11) of the securities act, also known as the intrastate offering exemption allows