Post by alanbond on Oct 17, 2014 10:51:54 GMT 4
Class AMPs: Withdrawing the Corporate Veil on Judgment Proofing
William A Muir
University of Toronto - Faculty of Law
2014
University of Toronto Faculty of Law Review, Vol. 72, No. 2, 2014
Abstract:
Limited liability rules can incentivize corporations to divest their assets to limit their liability, judgment proof their corporations, and evade catastrophic tort claims and criminal sanctions. Class-based administrative monetary penalties (class AMPs) can prevent corporations from judgment proofing by realigning corporate incentives. Rather than pierce the corporate veil and assign liability to shareholders, class AMPs would impute absolute liability to corporate officers as a class, according to the information and control available to their respective offices. The advantages of class AMPs would be three-fold: they provide a direct incentive to those best-positioned to prevent judgment proof claims to reduce potential uncovered liability to the public; they would be comparatively easier to prosecute because they attach to specific duties of corporate officeholders and do not require inquiry into individual fault; and their statutory basis in absolute liability makes their application more certain than comparable measures in the opaque legal doctrines of piercing the corporate veil or evidence-intensive director's liability regimes. The severity of the absolute liability sanctions would be mitigated by the administrative nature of AMPs and the relatively low quantum of penalty.
papers.ssrn.com/sol3/papers.cfm?abstract_id=2502238