If I own stock in a smallC-corporation, do I have any personal liabilities if the corporation is sued or looses and court judgement?

Asked on October 14, 2011 under Business Law, New Hampshire

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Many people operate their business out of a corporate entity or a limited liabilty company as a means of minimizing personal liability of the owner of the business. However, just because one's business is a corporation or a limited liability company this does not per se insulate the owner from liability personally.

It is very important that your business has adequate insurance for its operations, that it is adequately capitalized and that you keep your personal and private finances separate and distinct from the finances of the corporate business. Likewise regular meetings of the corporation as stated in its bylaws are a must so as to prevent any claims by creditors that the corporate separateness has been disregarded to create personal liability to the stockholders of the corporation.

With respect to only owning shares in a small C corporation and nothing more, you should have no concerns about personal liability if the corporation is sued or loses a court action resulting in a judgment against it.


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