Comment by mappum
11 years ago
Incorrect, the point of a corporation is to give its directors protection, and to give the corporation itself legal liability.
11 years ago
Incorrect, the point of a corporation is to give its directors protection, and to give the corporation itself legal liability.
The parent is not incorrect. Any corporate officer can be sued for actions they perform within a corporation.
The government can also pursue you monetarily due to actions you perform as an executive.
Just because the point of a corporation is to shield its directors / owners / executives, that has no bearing on whether it always does. Just because you have a corporation in front of you as an executive, that does not guarantee you won't lose in a court of law or that the government won't tear you to shreds.
See: Jeffrey Skilling
"Upon being sentenced, Skilling agreed to turn over $45 million to the Justice Department in conjunction with his conviction. The money is to be added to a restitution fund related to the civil litigation on behalf of employees and shareholders."
http://www.chron.com/business/enron/article/Skilling-settles...
Executives are very frequently responsible for all sorts of bad things they do in the name of a corporation. See: Worldcom, Adelphia, Enron, Tyco and countless other examples.
Can you sell your stake in the corporation to itself?
Yes, that's what stock buybacks are. But a corporation must have at least one human owner. That's not a rule, it's inherent in the definition of what a corporation is: a legal fiction to pool capital and liability. The implied question is, "pool it from where?" The answer: humans who have the legal right to own property and the legal duty to operate within the law.
How's it different than a buyback like Apple's so fond of?
In some jurisdictions you could also sell it to a wholly owned subsidiary of the parent corp.