Corporation:

Corporation Stockholders Officers Board of Directors rep.

Separate entity

Stockholder cannot be held liable for the acts in behalf of the corporation.

Artificial Entity

Created by operation of law

Right of succession, powers and attributes, properties expressly authorized by law or

incident to its existence.

Piercing the Veil of Corporate is disregarded when it becomes shield for fraud, illegality, or

inequity committed against third persons.

1. Control Test – complete domination, not only finances but of policy and business practice in

respect to the transaction. Corporation has no separate mind, will or existence.

2. Fraud Test – the control must have been used to commit fraud or malice to perpetuate the

violation of a statutory or other legal notice.

3. Harm Test – the injury or unjust loss complained thereof which resulted by the control to

commit fraud.

Exceptions when the Shareholder/Stockholder shall be held liable with the Corporation jointly and

severally (Solidarily Liable):

1. When a director, trustee or officer made himself solidarily liable to the corporation

2. When the directors and trustees vote for or assent to patently unlawful acts of the

corporation.

3. Acted in bad faith or with gross negligence in directing the corporate affairs.

4. Are guilty of conflict of interest to the prejudice of the corporation.

5. When a director or officer has consented to the issuance of watered stocks who having

knowledge thereof, did not forthwith file with the corporate secretary his written

objection thereto.

6. When a director, trustee or officer is made, by specific provision of law, personally liable

for his corporate actions.

Exceptions when the Shareholder/Stockholder shall be held personally liable with the

Corporation.

1. Complainant must allege in the complaint that the directors or officers assented to

patently unlawful acts of the corporation, or that officer was guilty of gross negligence or

bad faith.

2. The complainant must clearly and convincingly prove such unlawful acts, negligence or

bad faith.

Life of the Corporation – 50 years Maximum General Rule

Exceptions:

1. When the board of directors amend the articles of corporation to extend the life of the

corporations.