This is a follow up to a previous blog - Single Business Enterprise Theory f/k/a Amalgamation - that provided an overview of recent South Carolina appellate cases discussing and applying the test for considering multiple business entities as one in litigation.
By way of recap, in Pertuis v. Front Roe Restaurants, Inc., the South Carolina Supreme Court defined the theory as follows:
We formally recognize today this single business enterprise theory, and in doing so, we acknowledge that corporations are often formed for the purpose of shielding shareholders from individual liability; there is nothing remotely nefarious in doing that. For this reason, the single business enterprise theory requires a showing of more than the various entities' operations are intertwined. Combining multiple corporate entities into a single business enterprise requires further evidence of bad faith, abuse, fraud, wrongdoing, or injustice resulting from the blurring of the entities' legal distinctions.
(emphasis added)
While not in any way exhaustive, we have listed 10 suggestions for avoiding treatment as a single business enterprise.
One last thought, resist the temptation to use the word “amalgamated” in any of the company names.
Authors: Sarah Spruill and Philip Land
This article is intended to provide general information on the topics covered. The contents of this article are not intended and should not be construed as legal advice or legal opinions. The Reader should consult with legal counsel to obtain legal advice regarding particular situations. Any result the law firm and/or its attorneys may have achieved on behalf of clients in other matters does not necessarily indicate similar results can be obtained for other clients.