It’s Extremely Difficult for Anyone to Pierce Your Nevada State Corporate Veil.

First, what exactly does “piercing the corporate veil” mean? When you form a corporation, whether it’s in Nevada, California, Texas or wherever, you must follow certain corporate formalities. Remember, a Nevada state corporation can do everything you can do except act or think, so it does those things through your board of directors, officers and shareholders.

If your corporation does not keep accurate records of meetings by minutes, and if the corporation commingles funds, it makes it easier for someone to pierce your corporate veil if the corporation is involved in a lawsuit.

The burden of proof for all three “general requirements” is on the plaintiff who is seeking to pierce the veil, and a failure to prove any of the three will result in your veil not being pierced! Essentially, Nevada says that unless they can prove fraud, your corporate veil will not be pierced. Now that’s awesome protection!

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The Initial Decision

In the beginning stages of a Corporation’s life, the difference between a C-Corporation structure and an S-Corporation structure should have little significance to the owner. Every Corporation filed with any U.S. state starts out as a General Corporation. There is therefore is no distinction between the Articles of Incorporation for a C-Corporation versus the Articles for an S-Corporation.
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Find out more about American Corporate Enterprises by visiting our website at https://americancorpenterprises.com. At American Corporate Enterprises, Inc., we have the expertise to handle all your incorporation needs! Contact us Toll free (888) 274-1130 or (775)884-9380 today.

This post by Drinkwater Law Offices

Posted in Legal, Liability Protection

By: Kerry Kolvet, Esq.

The protection of assets is generally one of the biggest reasons to form a legal entity. Specifically, the protection of business assets from an owner’s personal liabilities is critical to a business’ continuing success. In many states, a personal creditor may charge a stockholder’s stock with payment of a judgment. Such a remedy could result in the forced liquidation of a viable business to satisfy an owner’s personal debt to the detriment of other owners.

In Nevada, charging order protection is extended to partnerships, limited liability companies and, more recently, corporations. What this means is that a personal creditor’s only remedy against an owner’s stock is a charging order and, as a result, that creditor must wait for distributions from that entity to satisfy any judgment. The creditor cannot force distributions from the entity, nor can the creditor exercise any control over the entity, thereby allowing the business to continue operations despite the creditor’s claim.

LLCs and Partnerships

Nevada has long recognized charging order protection for limited liability companies and partnerships, but most states have not extended that protection to corporations. As stated above, this protection prevents a creditor from foreclosing on the ownership interest and from the forced sale of assets to satisfy the judgment.

Corporations

Nevada was the first state to provide charging order protection to certain corporations under NRS 78.746. This provision provides the exclusive remedy available to a judgment creditor related to a stockholder’s stock. The judgment creditor is only provided the rights of an assignee of the stock and has no rights to management or control of the corporation, provided that the corporation meets the following requirements:

(a) Has more than one but fewer than 75 stockholders of record, at any time;

(b) Is not a subsidiary of a publicly traded corporation; and

(c) Is not a professional corporation

These restrictions closely mirror the IRS limitations for s-corporations and include most small businesses.

Conclusion

The expansion of these rights to certain corporations helps further Nevada’s business friendly reputation. However, it is unclear when and if other states will follow suit with similar legislation which leaves the answer unclear as to whether this law will be respected outside of Nevada.  © 2009 Drinkwater Law Offices

Find out more about American Corporate Enterprises by visiting our website at https://americancorpenterprises.com. At American Corporate Enterprises, Inc., we have the expertise to handle all your incorporation needs! Contact us Toll free (888) 274-1130 or (775)884-9380 today.

View our order forms to start incorporating and/or forming an LLC HERE!

Find out more about American Corporate Enterprises by visiting our website at https://americancorpenterprises.com. At American Corporate Enterprises, Inc., we have the expertise to handle all your incorporation needs! Contact us Toll free (888) 274-1130 or (775)884-9380 today.

From Nevada Lawyer Magazine – Nevada State Bar:

In addition to trust laws, Nevada has many laws not directly aimed at trusts which not only facilitate holistic estate and asset protection planning, but bolster overall trust-settling opportunities. For example, Nevada law provides for certain chargingorder- protected entities such as the limited partnership (LP), limited-liability company (LLC), and closely-held corporation. Nevada law protects the owners of such state-recognized entities from all forms of judicial remedies except that of the charging order.

READ FULL ARTICLE HERE

David M. Grant and Jeremy K. Cooper are estate planning attorneys at Jeffrey Burr, Ltd. in Las Vegas. They gratefully acknowledge the valuable insights and comments provided by Layne T. Rushforth, Esq. and J. Douglas Clark, Esq. in preparing this article.

Find out more about American Corporate Enterprises by visiting our website at https://americancorpenterprises.com. At American Corporate Enterprises, Inc., we have the expertise to handle all your incorporation needs! Contact us Toll free (888) 274-1130 or (775)884-9380 today.