alter ego


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Alter Ego

A doctrine used by the courts to ignore the corporate status of a group of stockholders, officers, and directors of a corporation in reference to their limited liability so that they may be held personally liable for their actions when they have acted fraudulently or unjustly or when to refuse to do so would deprive an innocent victim of redress for an injury caused by them.

A corporation is considered the alter ego of its stockholders, directors, or officers when it is used merely for the transaction of their personal business for which they want Immunity from individual liability. A parent corporation is the alter ego of a subsidiary corporation if it controls and directs its activities so that it will have limited liability for its wrongful acts.

The alter ego doctrine is also known as the instrumentality rule because the corporation becomes an instrument for the personal advantage of its parent corporation, stockholders, directors, or officers. When a court applies it, the court is said to pierce the corporate veil.

Courts have not traditionally applied the alter ego doctrine to other business forms, such as partnerships and limited partnerships, because partners generally do not enjoy the same form of limited liability as corporate stockholders, officers, and directors. By comparison, however, owners of limited liability companies may structure their business in a manner similar to a corporation so that members and managers are shielded from personal liability for the debts of the Limited Liability Company (LLC). Several courts have determined that the alter ego doctrine may also apply to LLCs. For instance, in Kaycee Land & Livestock v. Flahive, 46 P.3d 323 (Wyo. 2002), the Wyoming Supreme Court held that the equitable doctrine of piercing the veil was an available remedy under the Wyoming Limited Liability Company Act.

Cross-references

Corporations; Immunity; Liability.

alter ego

n. a corporation, organization or other entity set up to provide a legal shield for the person actually controlling the operation. Proving that such an organization is a cover or alter ego for the real defendant breaks down that protection, but it can be difficult to prove complete control by an individual. In the case of corporations, proving one is an alter ego is one way of "piercing the corporate veil." In a lawsuit complaint, it might be stated (pleaded) that "the Hotshot Corporation was the alter ego of Joseph Snakeoil."

alter ego

noun alternate, counterpart, double, living image, match, other, other half, other person, other self, perfect substitute, second self, shadow, stand-in, twin
Associated concepts: agent, alter ego doctrine, corporate alter ego, piercing the corporate veil, separate corporate entity
See also: complement, counterpart
References in periodicals archive ?
But if competitive pressure is there, they often try to set up an alter ego company.
Nicoletta Peruzzo from Alter Ego Italy, said: "Alter Ego Italy's global reputation, backed by our 25 years of experience and specialised expertise in hair care and the latest hair coloring technology is well known.
He said that the 35-year-old TV personality would scream that her alter ego was coming out and would crawl around on all fours.
Building on that demand, the brands will debut a broader range of Under Armour Alter Ego products, including an expanded collection of baselayer featuring both women's and girls' products, as well as a variety of apparel, footwear and gloves.
Sharing profits and losses is also a factor in determining (1) whether an agency relationship exists, (2) whether entities are partners by estoppel and (3) to the extent sharing profits and losses might also be considered intermingling of funds, whether an alter ego relationship exists.
Manuel Orozco, Founder and Managing Director of Alter Ego Communication said, "We wanted to provide an additional compelling benefit to our ADSL line subscribers by providing a solid voice over IP service.
Crumb's comic-strip alter ego asked on the poster for this eponymous retrospective at the Museum Ludwig in Cologne.
Leo, who we learn is actually Quant, the cat/lion alter ego, it seems, can travel at will between the two worlds being both alive and dead.
Parker's masked alter ego dispatches villains by the six pack, but poor Peter can't hold a job, keep up with his studies, or save his beloved aunt from eviction--and he sure can't show up for sweetheart Mary Jane (Kirsten Dunst).
Loosely based on Ravel's opera L'enfant et les Sortileges, the dance centers on a 9-year-old girl and her alter ego, with both roles danced by the insightful and often hilarious Rabidoux.
Grayson Perry,43, collected the pounds 20,000 prize at a ceremony at Tate Britain in London,dressed as his alter ego Claire.
a cross-chain D reorganization) or the TASCO recast (a distribution by T's alter ego), then T or the alter ego should recognize gain on the distribution of the NB asset.