An important aspect of doing business as a corporation is to avoid personal liability for corporate obligations, liabilities and debts.

There are, however, director, officer, or shareholder actions which can create personal liability. The filing of tax returns and the payment of all required taxes is one such area. The withholding taxes from employee wages are held in trust on behalf of the employee and the government and an officer and/or director can be personally liable if these funds are used improperly.

In addition, while statutes prohibit certain conduct, in recent years, courts have also ruled against officers and directors and found liability. Further, a shareholder may seek relief for improper actions that may hurt the corporation by bringing a Òshareholer derivitive suit.Ó

Some of the more important acts that can lead to liability include the following:

- Voting to pay dividends or purchase the corporationÕs own shares when the corporation is insolvent (or will become insolvent) or in violation of the articles of incorporation.

- Voting to distribute corporate assets to avoid paying the debts of the corporation.

- Voting to make a corporate loan to a director without appropriate approval of the shareholders or directors. (In some states such loans are prohibited).

- Improper investments or expenditures of corporate funds. Failure of directors to discover or prevent Antitrust violations.

- Embezzlement or Fraud.

To protect the director, the director should ask that the objection, dissent or abstention be entered into the minutes of the meeting and placed in the corporate record. In addition, the director should deliver a written objection, dissent or abstention to the corporation and request the it be entered into the corporate minutes.

You can contact Mr. Cooke at (312) 497-9002 or by email at "gc@Cookeslaw.com"

Mr. Cooke's fee is $300.00 per hour.