Single
Owner Entities and Piercing the Veil
Last week, Professor Joshua Fershee posted some thoughts on
the Business Law Prof. Blog in which he critiqued the decision of the
Hawaii Supreme Court, Calipjo v. Purdy,
439 P.3d 218 (2019) that could be read to suggest that a corporation or LLC
having a single owner would of itself support piercing on an alter ego basis.
That blog posting is titled If Sole
Ownership of An Entity Means Alter Ego, Then Veil Piercing Will Be Inevitable;
HERE IS A LINK to that posting.
Kentucky always faced with a similar imbroglio a number of
years ago in the form of the Rednour
decision wherein the fact that the subject LLCs had a single member was cited
as a basis for piercing. I have, in a three-part posting, provided a critique
of the Rednour decision, which are
available HERE, HERE and HERE.
In response to the Rednour
decision, both the Kentucky Business Corporation Act and the Kentucky LLC Act
were amended to provide, inter alia,
that having a single shareholder or member is not a basis for piercing the
veil.
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