death, resignation) causes dissolution. Other statutes distinguish between fault events (member misconduct ...) and non-fault events (death, bankruptcy), and some provide that dissolution can be avoided by paying the withdrawing member fair value for his interest.
b) Advantages of LLCs - An LLC for a business association, not publicly held, has strong advantages: partnership taxation, virtually no restrictions in structuring ownership interests and management, limited liability for owners and managers, and no limitations on the number or nature of owners.
C.DISREGARD OF CORPORATE ENTITY - since a corp is a distinct legal entity, shs are normally shielded from corporate obligations. In certain instances, however, the corporate entity will be disregarded. p> 1.PIERCING THE CORPORATE VEIL - (Suits by corporate creditors against shs) - it's more common in contract claims than in tort claims. The most important elements considered by the courts:
a) Commingling of Assets - commingling of corp assets and personal assets of shs (eg, paying private debts with corp funds) may lead to piercing of the corporate veil;
b) Lack of Corporate Formalities - whether basic corp formalities (eg, regular meetings, corporate records maintained, issuance of stock) were followed is also relevant. Statutory close corps are permitted more flexibility regarding corp formalities;
c) Undercapitalization - if the corp was organized without sufficient capital or liability insurance to meet obligations reasonably expected to arise, the corp veil may be pierced;
d) Domination and Control By Shareholder - the corp veil is often pierced when an individual or other corp owns most or all of the stock, so that it completely dominates policy or business decisions.
e) "Alter Ego," "Instrumentality," "Unity of Interest "- when no separate entity exists and the corp is merely the alter ego or instrumentality of its shs (could be a corporate shareholder), or when there is a unity of interest between the corp and its shs, the corp veil is often pierced. These terms are usually applied only if other grounds are present;
f) Fraud, Wrong, Dishonesty, or Injustice - generally, the veil will be pierced only if one of these elements is available, eg, no piercing of veil if there is a lack of corp formalities without resultant injustice. Piercing the veil usually involves corps with a small number of shs.
2.PIERCING HAPPENS MOST OFTEN WHEN:
1) The number of shs is small - the chance of one sh dominating the corp is greater;
2) Deception - There is some kind of deception;
3) Agency - individual is a "principal" and corp is his "agent"
4) Estoppel - outsider was led to believe that he was dealing with an individual, while in fact he was dealing with the corporation.
5) Direct tort - individual and corp acted together and should be jointly/severally liable
6)...
