A is corrent because normally the liability of shareholders of corporations is limited to their capital contribution. However, the court will "pierce the corporate veil" and hold the shareholders personally liable for the debts of the corporation if the corporate entity is being used to defraud people or to achieve other injustices. Thus, if the shareholders establish a corporation, knowing that it would have less capital than required for it to pay its debts, then the court will "pierce the corporate veil"and hold the shareholders personally liable.
B is incorrect because shareholders may also be corporate officers, directors, or employees without jeopardizing their limited liability status.
C is incorrect because a shareholder may loan money to the corporation without becoming personally liable for the debts of the corporation.
D is incorrect because the formation of a corporation solely to limit personal liability is a valid purpose so long as it is done without intent to defraud.
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