Dr. Simon discusses the corporate veil in his lectures. The corporate veil is the legal protection that the owners of a company get. In a sole proprietorship, someone’s personal assets are in danger if the business fails. Corporations limit this by making the business liable instead of the members. This prevents bankruptcy on a personal level caused by the business and allows for better investment and growth since members of the business are not worried about their personal assets.
However, the corporate veil is not fully invincible. In cases like fraud, courts can pierce this veil and hold the individuals in the business liable. This raises the following questions: how much should corporate owners be shielded from liability, and where is the line drawn? What level of personal liability would allow for an optimized balance between growth and holding back due to personal liability? Do you think the corporate veil should be stricter to protect innovation or less shielding to ensure companies take accountability?
I think that the corporate veil is an important protection that allows people to take on the risk of starting a company or investing in one in the first place. Without that protection, the uncertainty of a business surviving or not would also include the uncertainty that their personal savings, homes, or other assets would be safe. The veil gives budding entrepreneurs an easier foot in to take a chance that might let to a new product and jobs. Although I understand that some people can and will misuse this protection, and those people should be held accountable. However, in most cases, I think the corporate veil does more good than harm by encouraging business development. Still, not every company operates at the same scale or has the same impact if they to delve in bad business practices. Do you think there should be different levels of liability protections depending on the size of the company or the type of industry it's in?
