Is a corporation liable for a judgment rendered against a director?

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Is a corporation liable for a judgment rendered against a director?

I put a person on corporation as director in order to gain access to get state inspections for my customers. We signed an agreement and he does not have access to our assets or liability for any losses; respectively we aren’t responsible for his. Now he had judgement we were not aware of and they are trying to come after us for his judgment. What would our standing be in court?

Asked on April 6, 2015 under Business Law, Massachusetts

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The corporation should not be liable for his judgment unless and only to the extent that the other side can show that the corporation is more-or-less a sham and the "corporate" assets are actually the director's assets. (This is called "piercing the corporate veil.") If they can show that, they can reach the company's assets. The other side may believe that they can do this, or at least make a good enough showing, and cost you enough were you to defend the action, as to encourage you to offer them something (settle) to go away.


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