You think putting your license in a limited liability entity will always protect you? Think again. The FCC is holding an LLC’s owner personally accountable for a proposed $1.7 million fine because of his company's alleged misconduct. How’s that for “limited liability”?
Many, probably most, FCC licenses are not held by individuals. Rather, they’re held by organizations – corporations, or their near relations, limited liability companies, and the like. You might assume that corporate law protects individual shareholders in the FCC’s regulatory sphere in the same way that it does in the court system.
You would be wrong.
A recent Commission decision indicates that in some circumstances the FCC can – and will –look beyond the corporate form and hold shareholders personally liable for licensee obligations, even in situations where a court wouldn’t ordinarily be expected to.
Whether you love them or hate them, corporations are a prominent feature of the American economic landscape. A corporation is a legal “body” – an entity separate and independent from the individual people who own and control it. A corporation’s debts and liabilities come out of the company coffers; investors and owners can lose only as much as they put in.
The protected investors are not the only beneficiaries of this system. The broader economy, which affects everybody, wins, too. The centuries-old theory is that “limited liability” stimulates investment and keeps the economy bustling; would-be investors know that no matter how bad things go at the corporate level, their personal bank accounts (and houses, and cars) won’t be snatched up to cover the liabilities of the corporation.
But the principle of limited liability doesn’t always comport with the FCC’s idea of regulatory justice. Take the case of telecom company Telseven, a limited liability company.Continue Reading...