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EXECUTIVE COMMITTEE CORNER -2nd VICE PRESIDENT, MICKI REED
What’s in a Name? More Than You Might Think!
Protecting Your Club, Your Officers, and Our Federation
Is your club incorporated? If so, are you careful to use its correct legal name?
Many CFWC clubs are incorporated as nonprofit corporations with the California Secretary of State. Incorporation provides an important layer of protection, generally shielding individual officers and members from personal responsibility for the corporation’s debts and obligations. But that protection is not absolute!
Recently, I tried to ascertain a complete and accurate list of our California Clubs. I quickly discovered that some clubs use different names on their social media, their websites, in the California yearbook and the GFWC club list. This is very concerning.
When a corporation cannot pay its debts or a judgment against it, creditors may attempt to hold its officers personally responsible. One way they may do this is by arguing that the corporation was not operated as a separate legal entity. This is commonly called piercing the corporate veil.
What might they use as evidence? Sometimes it is the little things we overlook.
Checks bearing a different version of the corporation’s name. Contracts signed using an incorrect name. Club credit cards used for personal expenses. An officer signing an agreement without making it clear that she is acting on behalf of the corporation.
No single mistake automatically destroys corporate protection. However, these practices can become evidence to hold individuals personally responsible for corporate obligations.
And there is another reason we must be careful. We are part of something bigger than our individual clubs.
There is more to this article, click HERE to see the entire article.
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