Pierre Bonnard – Woman in a Veil

You may have heard the term “corporate veil”.

But do you understand what it is?  It sounds as if it could be a magic force field that encases companies housed in large buildings.

Actually, the concept is simpler than that, although it may have a bit of magic to it. 

Let start with the term “veil”. One of Merriam Webster’s definitions of “veil” is  “to cover, provide, obscure, or conceal with or as if with a veil.“

When a person forms a corporation or a limited liability company the entity has a legal existence that is distinct from the person.  One way to think of it is that usually the entity and the person file separate tax returns.  This means the company is legally different from the person.  The company can enter into contracts, make purchases, hire employees all on its own.  These activities, while guided by the owner of the company, are legally considered the actions of the company.

The corporate veil is the protection the owner of the company receives by forming a company.  The company assumes liability for actions rather than the owner being liable (usually).

The owner is veiled from liability by the company.  That is, the corporate veil is an intangible force field surrounding the owners of the corporation. It prevents the owners of the corporation from being liable for the misdeeds of the Corporation. Despite that, it may be the owners of the corporation who perpetrated the misdeeds through the Corporation.

There are some circumstances where the Oklahoma corporate veil may not hold up as expected and you can read about those situations in this blog post on “What does it mean to have your corporate veil pierced?”