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Comment by hospitalJail | Hacker News Reader

Back when I was 19 and an anarchist, I was always critical of LLC laws. I probably still am.

I believe the judicial system does do the fine as you mentioned, but the prosecutors have to be realistic and settle out of court at the risk a skeptical judge/jury.

Without LLC laws, you could go after personal ownership too. Privately owned company means there is a few billionaires to have their wealth confiscated. Publicly, our 401ks empty + risk of losing our homes.

Isn't that insane to think about? What would a world look like if that was the case. Would companies be incredibly responsible? Would investors be incredibly responsible?

I don't claim to say this is the best economic system, but it might solve our climate crisis by forcing people to be liable for themselves and what they own.

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Individuals and small businesses generally don't get great protection from LLC/incorporation and they get along just fine (when the owners are directly involved in running the business, it becomes much easier to pierce the veil).

IMO, what really needs to be reigned in is this blanket extension of natural/individual rights to synthetic entities that receive limited liability protection. That government-granted charter with limited liability means that they're not merely groups of people exercising individual rights collectively, as the supreme council has decreed.

I wonder if we could have fractional death penalty. Some lifetime counter on your responsibility of deaths by companies you own. When certain threshold let's say 0.5 is reached, it will be carried out when ever you are apprehended.

I'm not sure that the LLC laws are exactly the problem.

I think it's the fact that you can get a company incorporated to do pretty much a vague _anything_ is the problem. There should be an ounce of thought by the State as to if what the person wants a company for is actually useful for society before granting them immunity.

The second major issue is that the State is never willing to dissolve a company once it reaches some size no matter how much wrong doing it does. Like Walls Fargo willfully creating fake accounts to charge consumers money should've just be an instant disqualification for a banking license.

First, a corporation can’t do anything that an individual can’t do.

Second, incorporation does not protect the business, it protects investors. Without it, investors would be general partners and would be personally liable for anything the business does, including all debts and torts, even if they had no active role in running the business.

Third, where owners of a corporation or LLC do participate in running a business, they often can be held personally liable for the debts and torts of the business. This is called “piercing the corporate veil” and happens all the time in lawsuits against small businesses.

> First, a corporation can’t do anything that an individual can’t do.

The problem is not that a corporation can do something that an individual can't. It's that you can't punish a corporation the same way you can an individual. Corporations cannot sit in a jail cell.

> Second, incorporation does not protect the business

Your Third point kinda disproves this. You have to "pierce the corporate veil" in order to hold individuals of the LLC liable and this is generally w.r.t. an LLC commingling its funds with the owners funds. Not to do with an Owner doing an undesirable/illegal act (say fraud).

> Third, ... happens all the time in lawsuits against small businesses.

I'm not really sure any of these points counter-act anything I wrote. I explicitly called out Wells Fargo and you responded that small business routinely get attacked. Wells Fargo is not a small business.

Any person who commits a crime on behalf of their employer can and should be held criminally liable. That the employee was instructed to do so by his manager will not prevent his conviction, it will only be evidence that the manager should also be held criminally liable.

Veil-piercing is relevant when the business is insolvent or can’t pay the judgment. So the corporate entity isn’t protecting the business in that case.

Re Wells Fargo, would you hold ordinary shareholders who do not participate in the management of the business liable for debts of or crimes committed by Wells Fargo?

> investors would be general partners and would be personally liable for anything the business does, including all debts and torts, even if they had no active role in running the business.

I think it would be a better world if investors were held responsible for the wrongdoings of the businesses they finance.

If that were the case, you wouldn’t have nearly as many investors.

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