Jasmine is the sole shareholder of fashionPlusYouInc which is planning to borrow $100000 from the bank to finance a second store location. What is Jasmine’s legal position should FashionPlusYouInc default on the loan?

Jasmine is the sole shareholder of fashionPlusYouInc which is planning to borrow $100000 from the bank to finance a second store location. What is Jasmine’s legal position should FashionPlusYouInc default on the loan?

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Answer

• She and the corporation are jointly liable for the debt
  Explanation:
  A sole shareholder is jointly liable for all debts of the company if no new shareholder has joined the company. and the company legal structure remains the same up to when the loan is taken. And also, the joint liability continues until when the corporation is wound up. Therefore, Jasmine assets and those of the company can be used to cover for the debt.