Busting Through Company Protections in Florida: What You Need to Know

1. Lack of separateness between the corporation and its shareholder(s)
2. Improper conduct in the use of the corporation by the shareholder(s)
3. Improper conduct was the proximate cause of the alleged loss – The corporation was so controlled by its shareholder(s) that its independent existence was non-existent, making the shareholders alter egos of the corporation.
– The personal affairs of the shareholder(s) became confused with the business affairs of the corporation.
– The parent corporation’s control over the subsidiary was so extensive that the subsidiary was a mere instrumentality of the parent.
– Factors such as domination by a single or few shareholder(s), failure to follow corporate formalities, commingling of corporate and personal affairs, and inadequate capitalization were present.
– Common management and limited business discretion were evident in the parent-subsidiary relationship. – The subsidiary and the parent share the same facilities, address, and telephone numbers.
– The subsidiary’s contracts are performed by employees of the parent.
– The subsidiary shares bank accounts and financial obligations with the parent.
– The parent pays the salaries, expenses, or losses of the subsidiary.
– The subsidiary fails to deal with the parent at arms-length.
– The parent finances the subsidiary.
– The parent and subsidiary file consolidated income tax returns.
– The parent and subsidiary are not treated as independent profit centers.
– Florida courts will not pierce the corporate veil merely because the corporation is owned by only a few shareholders or is a wholly-owned subsidiary.
– Florida courts are unlikely to pierce the veil of a publicly-traded corporation or a corporation with numerous shareholders.
– The plaintiff must prove that the corporation was either organized or used to mislead or defraud creditors.
– Improper conduct includes the corporation being a mere device or sham to accomplish some ulterior purpose. 1. The purpose of the corporation was to evade statutes or accomplish fraud or illegal purposes.
2. The corporation was used for fraudulent or misleading purposes.
3. The corporation was organized or used to mislead creditors or to perpetrate a fraud upon them, or to evade existing personal liability.
4. Florida courts require deliberate misconduct for improper conduct to be established.
5. Negligence or reckless conduct alone are not sufficient to establish improper conduct under Florida law.
6. Poorly handled business affairs alone are insufficient to establish improper conduct.
7. The doctrine of piercing the corporate veil is an extraordinary remedy in Florida and allows judgment creditors to hold corporation owners personally liable for the corporation’s debts.

https://www.jimersonfirm.com/blog/2017/10/piercing-corporate-veil-florida/