What is one condition that leads to piercing the corporate veil in Georgia?

One condition that leads to piercing the corporate veil in Georgia is commingling of personal and corporate assets. This concept refers to situations where an individual treats the corporation and their personal finances as indistinguishable from one another. When shareholders mix their personal funds with corporate funds or fail to maintain distinct records for both, it creates ambiguity about the corporate entity’s separate existence.

This lack of separation undermines the fundamental principle that a corporation is a distinct legal entity, which protects shareholders from personal liability for corporate debts and obligations. Courts may determine that if the boundaries between personal and corporate assets are not clearly maintained, then the corporate entity can be disregarded in legal proceedings. Thus, creditors may pursue shareholders personally to satisfy corporate debts. This condition serves as a safeguard against the abuse of the corporate structure, ensuring that the protections of limited liability are not used as a shield for improper conduct.