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 ?
Visionary, inventor and author Raymond Kurzweil will present his female alter-ego, Ramona, to rock the New York Music and Internet Expo (NYMIE) in his presentation at 11 a.
Inspired by the top-rated animated series appearing on ABC, Nickelodeon, and UPN, Disney's Doug: Doug's Big Game immerses the player in the whimsical world of Doug and his alter-ego Quailman in an action-packed, full-speed-ahead adventure to rescue Patti Mayonaise.
Using the remote control from the DVD movie player, game enthusiasts can choose to guide Ace, or his weak alter-ego Dexter, through Borf's strongholds to find and destroy the Infanto Ray, rescue Kimberly and save the Earth.
Upon a borrower's request for modification of the loan documents, the seller should consider requiring (in lieu of a CCP Section 580b waiver): (1) that a creditworthy person or entity (who is not an alter-ego of the borrower) guaranty the loan, (2) that the aggregate debt encumbering the property be reduced, (3) that additional collateral be provided to the seller, or (4) that substitute collateral be provided and any non-recourse provisions eliminated.
Recognized as Ally McBeal's television alter-ego, Shepard wrote the series theme song, provides additional songs for weekly episodes, and frequently appears on camera singing.
Snoopy's Joe Cool Summer" is a park-wide celebration of shows and entertainment saluting Snoopy's sunglasses-wearing alter-ego.
In fact, he has so many alter-egos it's a wonder that he knows who he really is - and it must be a nightmare for his real-life partner, Hollywood star Isla Fisher.
Another man with several alter-egos is Barry Humphries, aka Dame Edna Everage, the Melbourne housewife and "gigastar".
The boy band's superhero alter-egos will be featured in a Burger King promotional campaign beginning in August, just after the launch of their online series of animated episodes.
2 -- color) Alter-egos of The Backstreet Boys in action in ``The Backstreet Project,'' Stan Lee Media's series of animated Webisodes featuring the band.