When shareholders invest into a corporation, there is an expectation of limited losses amounting to the financial investment made. However, if the company is not properly run, officers, directors and shareholders are exposed to the blade of the law. This is known as piercing the corporate veil. Therefore it is critical for any shareholder, director, or officer of a small corporation to understand what is required to protect your personal assets from exposure to creditors and the long arm of the government.
The corporate shield is a legal barrier preventing creditors and the government from gaining access to the personal assets of the owner(s)/shareholder(s) of a business. This shield is created by incorporating the business or creating a limited liability company.