UNDERCAPITALIZATION AS AN INDEPENDENT GROUND FOR SHAREHOLDER LIABILITY: THE CASE FOR CORPORATE STAKEHOLDERS
This thesis defends the position that undercapitalization of private companies should be an independent basis for shareholder liability. The thesis examines the developments in the law by exploring the work of commentators, legal scholars, and judges on the importance of protecting corporate stakeholders against undercapitalized corporations. American courts have also dealt with the issue in a number of cases, the majority in which the courts have not considered undercapitalization to be an independent ground for shareholder liability. These cases are critically examined to determine the reasoning behind the courts’ decisions. Ultimately, this thesis concludes that the arguments in favour of undercapitalization as an independent factor for veil piercing are more persuasive than the arguments against this view.