As a passive investor in an S Corp, do I face any personal liability if the company should be sued, go bankrupt, or otherwise?

I am considering an investment in a Washington State S Corporation. As a passive investor, I want to know if my investment is limited to the money I have invested, or can it go further than that? ie. Can I be held responsible for in the case of bankruptcy, litigation or otherwise as a simple passive investor? - Is this your question? Add additional information
Answer this question Add to list

Answers (1)

Stuart Alan Heller

Stuart Alan Heller

Contributor Level 5
Unless you have a shareholder or other agreement that makes you liable, or you personally participate in some wrongdoing by the company, you should be shielded from personal liability. Also if the company does not behave like a corporation (e.g. doesn't have bylaws, doesn't hold annual shareholders' meetings, doesn't create and retain minutes of its shareholders' meetings, etc.) it is possible though difficult for someone suing the corporation to successfully claim that the corporation is a sham , "pierce the corporate veil" and go after the sharehlders.
1 0
Back to Search Results

Ask a Question

Get free answers from real lawyers.