Can a CEO be liable for a noncompliant business?

On Behalf of | Apr 12, 2022 | Blog, Fraud

How prepared are you for an unexpected civil lawsuit? There are many ways that a business can be targeted in the state of California. You can be named as the defendant in a whistleblower lawsuit, or you might be investigated for tax fraud. As the CEO of the company, liability may fall squarely on your head, so you should know the implications.

Are you at risk for a liability judgment?

There are many ways in which the CEO of a company can find themselves being held liable. You may be the one who is held personally accountable for illegal acts that are taken by, or on behalf of, your business. These acts can include fraud, gross negligence or any other type of legal violation.

Keep in mind most levels of liability will begin and end at the purely corporate level. This will safeguard you in a number of situations. But you should also be aware that an investigation into the noncompliance of a business may also reveal personal wrongdoing. If this is the case, you may well be held liable.

How can noncompliance lead to personal liability?

The last thing that any CEO of a business wants to do is face an indictment for fraud or noncompliance. You may be implicated in a corporate veil-piercing investigation. If this is the case, you can be held liable for debts that are owed by the company to commercial and other creditors.

There may also be other acts, such as negligence, oversight or omission, that you could be held responsible for. It’s a good idea to understand the extent of your potential liability in such cases. This can save you a great deal of time, energy and money going forward in defending against the accusations.