alter ego liability

An alter-ego is a Latin word meaning the other I believed to be different form the original personality. In the corporate world, the legal doctrine pierces the corporate veil, which implies that limited personal liability of stakeholders in a limited liability firm. As such, it holds the directors personally liable for the company’s debts. Alter ego can be applicable where it can be shown that the company is just a conduit or it is a front for personal dealings of certain individual (FindLaw, 2015). Under these circumstances, the company ceases to exist as a legally established separate and independent entity as envisaged in the corporate legislation.

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The act of a corporate moving its headquarters to a new location to avoid income tax can be viewed to be both ethical. The firm’s duty to pay dividends to its shareholders is greater than the duty to pay tax to the government. The shareholders want to maximize their returns hence if moving a firm’s headquarters to another location increases the returns then its justified. More so, avoiding tax is allowed by law so there is no offense in doing it.

FindLaw. (2015). Cases and Codes. Retrieved from FindLaw For legal professionals:
Martin. (2010). Limited Liability Company & Partnership Answer Book. New York: Aspen Publishers.

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