2006-07-08 15:44:40 · 7 answers · asked by angel_rat_83 1 in Business & Finance ➔ Corporations
The Director and officers can individually be liable to a company for the acts of the corporation. Shareholders no, they only have an investment into the company, they don't make the laws that they have incorporated under, or do the have access or plan daily financial records and/or hire/fire, nor draw up an contracts with other companies. The directors are alway the ones held responsible look at Enron.
2006-07-08 15:51:00 · answer #1 · answered by M360 3 · 0⤊ 0⤋
Directors and corporate officers can be held liable because they're operating on behalf of the company itself.
However, shareholders are purely investors in the company and cannot be held liable.
FYI, since the Enron scandle, corporate governance rules (those rules that govern the behavior of corporate officers, etc.) have been tightened. This means that more and more are being held to a higher standard to prevent another Enron from happening.
2006-07-09 11:39:33 · answer #2 · answered by msoexpert 6 · 0⤊ 0⤋
Shareholders can't. That's what "limited" means - the worst that can happen to a shareholder, is that their shares become worthless.
Directors ("The Board Of Directors") oversee the operation of the company. They ensure that the corporate executives behave. If they fail in their duty (inculding duty of "oversite") then they are liable. Most corporations take out insurance to cover the directors' liability and legal fees for this, nowadays. Recent lawsuits are forcing directors to pay more attention to their duties. A typical lawsuit nowadays is over poor oversight of the executives, or failure to properly control executive pay.
Officers generally can't be held liable for doing their job properly - just if they do something wrong. If they are negligent or break a law, then they (and possibly the corporation) can be held to account.
2006-07-09 01:58:55 · answer #3 · answered by Anon 7 · 0⤊ 0⤋
A Director, Officer, and the Entity (corporation) can all be named in a suit. As for the acts of the corporation, someone or some people are behind these acts. The board of directors is responsible for oversight, even though most are not involved in the day-to-day management/operations. In that respect, they can be held accountable for the actions of others.
2006-07-08 22:59:26 · answer #4 · answered by Anonymous · 0⤊ 0⤋
The director's and officers can. The shareholders can't
2006-07-08 22:47:52 · answer #5 · answered by Peedah 3 · 0⤊ 0⤋
This really depends on whether this involves fraud- if it can be shown that a shareholder or shareholders were also involved then, yes, they can be. There is no "get out of jail" card for fraud.
2006-07-09 00:28:14 · answer #6 · answered by besttaxexpert 2 · 0⤊ 0⤋
The shareholders can not lose more than thier shares are worth.
2006-07-08 22:52:56 · answer #7 · answered by Rhoni H 1 · 0⤊ 0⤋