Also known as: unity of interest
Written by attorneys · grounded in primary & secondary sources — see below
An element of the alter ego test for piercing the corporate veil requiring that the corporation and its owner have such overlapping ownership and control that their separate legal identities have merged. Factors establishing this element include commingling of funds, failure to maintain corporate formalities, undercapitalization, and one entity treating the assets of another as its own.
Isaac Irving formed Imperial Motors with minimal capital and kept no separate corporate books. He paid personal expenses from the corporate account and transferred all profits and equipment to a holding company he also owned. When customers obtained a judgment for defective vehicles, Imperial Motors had no assets left. A court found unity of interest because Irving had erased any distinction between himself and the corporation.
Irene Ingalls created Icarus Aviation with almost no reserves and observed no board meetings or recordkeeping. She routed all customer payments through her personal account and used corporate funds for personal loans. After a crash left policy obligations unpaid, the shell entity had nothing. Unity of interest existed because the company functioned only as Ingalls's personal instrument.
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Ilana Isaacs directed both a parent manufacturing firm and its wholly-owned subsidiary to commingle all funds in a single account while observing no separate board meetings or records. The subsidiary had no independent capital and treated all assets as the parent's own. Because the entities operated with complete unity of interest, a court pierced the veil to reach the parent's assets.
Ira Irving and Ingrid Innes formed a corporation that held land. Irving paid personal expenses from corporate funds, maintained no separate records, and treated the land as his own asset. When creditors sued, the court found unity of interest because the corporation existed only as Irving's alter ego.
Ines Ibarra created a corporation that received estate property but immediately transferred all funds to her personal account and kept no corporate books. The entity was undercapitalized and observed no formalities. A court found unity of interest and pierced the veil because the corporation lacked any separate existence.
Insight Consulting formed a corporate subsidiary with no capital and used it solely to route payments to Insight's owners. All funds were commingled and the subsidiary observed no formalities. Because unity of interest existed, creditors could reach the parent's assets under the alter ego test.
Courts examine commingling of funds, failure to maintain corporate formalities, undercapitalization, and treatment of corporate assets as the owner's own. These indicators demonstrate that the corporation lacks any separate personality from its owner.
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No. The doctrine requires both unity of interest and a second showing that respecting the corporate form would sanction fraud or promote injustice. Mere domination without the injustice element is insufficient.
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Undercapitalization is one relevant factor but is not dispositive by itself. Courts weigh it together with commingling, disregard of formalities, and asset diversion to determine whether the entity truly lacks a separate existence.
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Yes. The same unity-of-interest and injustice analysis governs both corporate and LLC veil-piercing claims when an owner treats the entity as a mere shell.
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…true of contributions to national parties, with which federal candidates and officeholders enjoy a special relationship and unity of interest. This close affiliation has placed national parties in a unique position, "whether they like it or not," to serve as "agents for spending on behalf of those who seek to produce obligated…