Nevada Corporate Legal Questions

The question of creating a limited liability company that cannot be "breached" is a matter of proper formation, capitalization and operation.  Chapter 86 of the Nevada Revised Statutes provides liability protections for members of an LLC.  Generally no member or manager of any limited-liability company formed under the laws ofthe State of Nevada is individually liable for the debts or liabilities of the company. NRS 86.371.  A member of a limited-liability company is not a proper party to proceedings by or against the company, except where the object is to enforce the member's right against or liability to the company. NRS 86.381.  This latter statute allows members who are named to seek dismissal from the action. As far as identification of the owners of a limited liability company, there are some protections in that the annual corporate filings of a Manager-managed LLC only requires disclosure of management and not ownership.  While creating multiple layers of holding companies can create some degree of insulation from disclosure of details, you should understand that with additional layers of bureaucracy for creditors comes additional layers of bureaucracy for the entities and its management in being able to function. ... Read More

Under Chapter 78 of the Nevada Revised Statutes, an officer is not liable for the debts or liabilities of a corporation solely based upon his or her officer position.   Under NRS 78.130, the secretary or other officer of a private corporation was held to only hold the authority delegated to him by the bylaws and board of directors of the corporation and is not solely by reason of that office personally liable for debts of the corporation. Berman v. Riverside Casino Corp., 247 F. Supp. 243 (D. Nev. 1964), aff'd 354 F.2d 43 (9th Cir. 1965).  More specifically NRS 78.747 provides:  NRS 78.747  Liability of stockholder, director or officer for debt or liability of corporation.             1.  Except as otherwise provided by specific statute, no stockholder, director or officer of a corporation is individually liable for a debt or liability of the corporation, unless the stockholder, director or officer acts as the alter ego of the corporation.             2.  A stockholder, director or officer acts as the alter ego of a corporation if:                   (a) The corporation is influenced and governed by the stockholder, director or officer;                   (b) There is such unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other; and                   (c) Adherence to the corporate fiction of a separate entity would sanction fraud or promote a manifest injustice.            3.  The question of whether a stockholder, director or officer acts as the alter ego of a corporation must be determined by the court as a matter of law. However being an officer of a corporation does not in and of itself absolve a person of for his or her individual acts and liabilities. For example, officers and directors have been held personally liable where they transferred assets to shareholders instead of creditors. See Nevada Land & Mortgage Co. v. Lamb, 90 Nev. 247, 524 P.2d 326 (1974)... Read More

In most instances, passive shareholders have no duty of loyalty or exclusivity to an entity in which they hold an equity stake.  Nonetheless some closely held companies have exclusivity or non-competition covenants as part of their bylaws or operating agreements.  You should verify regarding whether you have executed any covenants as part of your ownership interest.... Read More