I'm an Indian citizen residing in India. If I get 20% equity in a US company, am I responsible for the company's debts (current and future debts)?

Note that this is a sweat equity (no money invested). I'm getting this because of my contribution in product development.



Usually no.


A corporation is an incorporated entity designed to limit the liability of its owners (called shareholders). Generally, shareholders are not personally liable for the debts of the corporation. Creditors can only collect on their debts by going after the assets of the corporation.

Shareholders will usually only be on the hook if they cosigned or personally guaranteed the corporation’s debts. However, shareholders may also be held liable if a creditor can prove corporate formalities weren’t followed, shareholders commingled personal, and business funds or the corporation was just a shell designed to shield liability. This is called piercing the corporate veil.

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