Piercing the Corporate Veil in Regulated Industries
- Author(s):
- Douglas Smith
- Posted:
- 2008
- Law & Economics #:
- 08-08
- Availability:
- Full text (most recent) on SSRN
ABSTRACT:
This article addresses the theoretical justifications for limited liability and the exceptions to limited liability under the various veil piercing doctrines. In particular, the article considers whether veil piercing is appropriate in regulated industries such as insurance and banking, which have comprehensive regulatory structures that are designed to prevent much of the conduct that veil piercing is designed to remedy. The article concludes that veil piercing is not justified under such circumstances because the economic costs outweigh any benefits.