Comment by tpmoney
11 days ago
While this sounds good in theory, I suspect the actual result would be much worse for justice in most cases. With the corporation acting as its own legal entity, if you are wronged, you sue and obtain justice from the corporation. If instead you needed to sue each and every shareholder to obtain their share of the liabilities, you'd likely spend many more years in court as each individual owner argues why they aren't personally liable for the given act because they didn't have knowledge, or control over the specific chain of events that caused you harm, and the courts have to sort out each individual case.
I think you missed the point: you can still take damages from the corporation, but if corporation cannot provide them (bankrupcy), owners are held liable for them instead. This is how non-LLC companies are treated.
The instrument of Limited Liability exists to encourage business formation and risk taking for small businesses to kick off.
The way large corporations and rich individuals would structure their projects into a number of corporation-owned LLCs is an obvious gap being addressed in law systems throughout the world.
That would make everyone who has a 401K, IRA, mutual fund, ETF or stocks liable for every action made by the companies invested in. That would be insane.
I am not making a judgement call, merely describing what the GP meant.
I do believe it is not as clear cut though — taking it to an extreme, imagine you directly invested in Epstein's sexual abuse business but only as minority owner. Should you be held liable or not? Now let's extend that to a pyramid scheme lending business. Or a company using child labour? When can we claim immunity and when not?