101 South Hanley, Suite 1280 Clayton, MO 63105
314.283.8930

Personal Liability from a Business Debt

There are certain circumstances in which a business liability can flow through and result in personal liability to a business owner. Missouri law permits a court to “pierce the corporate veil” and make an owner liable for a business debt when the following is shown: 

(1) There is control and complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to the transaction has no separate mind, will or existence of its own apart from the owner(s). 

(2) The control was used by the corporation to commit fraud or wrong, to perpetrate the violation of statutory or other positive legal duty, or a dishonest and unjust act in contravention of plaintiff’s legal rights. 

(3) The control and breach of duty proximately cause the injury or unjust loss complained of. 

In other words, if the owner of a business (e.g., corporation, limited liability company) has complete control of the company and uses that control to commit a wrongdoing that proximately causes an injury, then the individual owner (e.g., shareholder, member) may be held liable for the business debt or liability. 

Contact with questions.