West Virginia Senate Bill SB6

West Virginia 2022 Regular Session

• Introduced: 1/12/22
• Refer: 1/12/22
• Engrossed: 2/10/22
• Refer: 2/11/22
• Enrolled: 3/12/22
• Passed: 3/12/22
• Chaptered: 4/20/22

Caption

Establishing common law “veil piercing” claims not be used to impose personal liability

Impact

The legislation modifies how courts assess personal liability for members of an LLC, potentially reducing the likelihood that individual members will be held financially responsible for the company's debts or liabilities. By establishing specific criteria under which veil piercing can be applied, the bill aims to protect members from personal risk while promoting the use of LLCs as a business structure. In essence, the law seeks to balance the interests of creditors with the personal security of LLC members, addressing concerns raised in the prior legal framework.

Summary

Senate Bill 6 amends the Code of West Virginia to clarify the applicability of corporate veil piercing claims. The bill ensures that members or managers of a limited liability company (LLC) will not be personally liable for actions related to the company, particularly in instances where fines or penalties are assessed against members for actions unrelated to the company. It establishes a clearer framework for the personal liability of LLC members while modifying the legal interpretations set forth in the Joseph Kubican v. The Tavern, LLC case from 2013 concerning personal liability and corporate obligations.

Sentiment

The sentiment surrounding SB 6 appears to be supportive among business owners and those advocating for a stable business environment. Proponents of the bill argue that it will encourage entrepreneurship by limiting the risks associated with LLC membership. Conversely, there may be concerns from consumer advocacy groups about the potential for reduced accountability of LLC members, especially in situations where individual wrongdoing could lead to harm. The debate reflects a broader tension between protecting business interests and ensuring consumer protections.

Contention

Notable points of contention surrounding SB 6 include debates on the adequacy of the protections for creditors in cases of LLC insolvency or misconduct by members. Some critics express concern that the bill could create scenarios where LLC members evade responsibility for fraudulent or negligent actions by taking advantage of the protective veil, thus hindering justice for injured parties. This highlights the ongoing struggle to find an equitable balance between fostering a business-friendly climate while ensuring that legal avenues are available for victims of corporate malfeasance.