It has, I think, some social utility to limit an investor's liability for debts of a corporation to his or her stake invested in it. Again, I go back to the early purpose, which was to secure investment for things which had a high risk of failure, as well as potential for great profit; overseas trade in the age of sail, mining, that sort of thing. There are things it is of wide benefit to have done, which might well not be done if investors had to fear they could wind up owing sums much larger than those they had invested if an enterprise failed badly.
That said, it is clear this sort of thing is subject to abuse, with manipulations of holding companies and shell companies, which allow a corporation to shed its debts and commitments by essentially becoming itself an investor in an another corporation, to which its debts are transferred, and which then goes into bankruptcy. Such behavior amounts to deliberate fraud, and ought to be regarded as criminal.
Where actions of a corporation violate the law, there should be no limit to liability for its directing officers, and for its board. This is one of several areas in which the legal fiction of 'corporate person-hood' breaks down completely, since the corporation has of course no actual existence, no will of its own, no capacity whatsoever to carry out any action independently at all. Everything done by corporation is actually an act of its owners, its management, and its directors. It is nonesense to say, for example, Bank of America broke a law: Mr. Moynihan, or his predecessor Mr. Lewis, broke a law, or profited by the breaking of a law by their subordinates for whose actions they bear command responsibility, and the board of directors which maintained them in officer ought to bear command responsibility for their actions as well. Acts of fraud or theft by corporate officers should be treated no differently from acts of fraud or theft by any individual, save that the greater scale and scope of wrong-doing by corporate officers ought to be considered an aggravating factor at sentencing.
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