Corporate Governance Protects the Corporate Veil

Corporate lawyers, corporate veil, corporation, bylaws

Effective corporate governance protects the corporate veil and ensures the viability of the legal protections of your San Diego LLC, S-Corporation or C-Corporation.  Who is responsible for corporate governance?  What is the corporate veil and why is it important to fulfill all aspects of corporate governance and compliance?

The owner, managing member of an LLC, managing shareholder(s) of a corporation and/or the Board of Directors are responsible for managing the operations of the company.  This includes ensuring that all corporate documentation and corporate agreements are regularly updated, required meetings are held and minutes recorded and appropriate fees and reports paid and provided to the State of California and any appropriate federal, state or local agency.  These responsibilities include interfacing with external government agencies and regulatory compliance with all government mandates and regulations, as well as interfacing with external entities and individuals.

Corporate governance extends to the behavior and actions of all employees of the LLC or corporation.  As representatives of your company, your employees must be trained and kept abreast of all applicable federal, state and local laws to ensure that they are legally and ethically representing your LLC or corporation.  The corporation or LLC exists to separate its owners from personal liability from the company’s debts and legal liabilities.  Corporate governance protects the corporate veil and without continuous vigilance in governance and compliance a creditor or federal agency could “pierce the corporate veil” and hold shareholders or members personally liable and financially responsible for the corporations debts, obligations and liabilities.

In addition to federal, state and local regulatory and legal compliance, corporate governance extends to operational health and safety concerns, wage and hour compliance, Sarbanes-Oxley, OSHA and when applicable HIPPA compliance.  If you accept credit card payments you are required to meet federal and state standards for the storage and protection of credit card and customer information.  Finally, compliance and governance extends to how your company adheres to its own internal policies and procedures.

Effective corporate governance protects the corporate veil and reduces lawsuits and internal disputes.  Contact the Watkins Firm for a free consultation at 858-535-1511.

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