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 ?
James Terry of law Firm Zetlin & De Chiara LLP, who has represented several contractors, said federal courts have become better at handling alter ego suits.
The Court lays out the two key elements of the alter ego doctrine: "(1) the owner exercised complete control over the corporation with respect to the transaction at issue and (2) such control was used to commit a fraud or wrong that injured the party seeking to pierce the veil." [Slip op.
with the power to enforce his will." Considering the rapturous reception given to House's White House alter ego, "it is easy to imagine Wilson developing delusions of Philip Druish political grandeur," observes Fleming.
368(a) recast (i.e., 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.
He said afterwards: "Alter Ego has always worked well enough, but I thought she'd need the race, although she did it nicely.
Birnbaum then interprets the existence of a living present as an originary alterity that must be seen as preceding and being connected to the alter ego. The alter ego is also characterized by a living present which reconfirm its radical otherness.
The new Alter Ego watch reflects the feminine values of inner strength, grace and reliability whilst combining quality and durability with sophistication and elegance.
But what about the health aspects of Alter Ego? The line of four beverages boasts the addition of standardized herbal extracts including astragalus, chamomile, guarana, fo-ti (a blend of Chinese herbs), echinacea, ginkgo, Siberian ginseng and kava kava.
Although this language seemed to presage an alter ego relationship between each DISC and its parent, the court stated, "the nexus is established by the parent of the phantom corporation [engaging] in the export business in the state." Id.
At kung ginagalang niya ang posisyon niya bilang alter ego ng pangulo,' Topacio said.
It is believed that Gaga's alter ego is her way of poking fun at rumours that she is a hermaphrodite.
Ok, yes.; "These glasses might show everyone just how sensible I am now." Good thinking, Brit.; Felicity Huffman can teach Desperate Housewives' alter ego, Lynette, speccy chic.; The picture that Beyonce drools over when she's away from her husband, Jay-Z?; He could wear glasses made of tin cans and we'd still find Johnny Depp incredibly sexy.; We love Kelly O's cute specs..