Disregard of the corporate entity: the misuse of the company must be proven (CSJN, «Cingiale v. Polledo Agropecuaria»)

In «Cingiale v. Polledo Agropecuaria» (2002) the Supreme Court set a restrictive standard on the unenforceability of legal personality (art. 54 LGS): the extension of liability to shareholders and directors is warranted by the illegal or diverted use of the company contract, not by the mere illegality of the acts the company carries out.

What was at issue

Whether liability for the employing company's labor debts should be extended to its shareholders and directors, invoking the unenforceability of legal personality under art. 54 LGS.

What was decided

The Court adopted a restrictive standard: extending liability requires proving that corporate personality was used in an illegal or diverted manner, as a device to violate the law or defeat rights.

It is not enough that the company committed an illegal act (for example, a labor registration irregularity): the diversion in the use of the corporate form must be proven.

Source: CSJN, «Cingiale, María Cecilia y otro c/ Polledo Agropecuaria S.A. y otros», 05/03/2002 — CSJN case-law

Practical application

For the claimant, pointing to an unpaid debt of the company is not enough: the maneuver that justifies piercing the veil must be demonstrated. For shareholders and directors, it is a central defense against automatic extensions of liability.

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