Virginia applies an equitable, fact-specific two-prong test: unity of interest such that separate personalities cease to exist, plus injustice. The entity must be the “alter ego, alias, stooge, or dummy” of its members — used to disguise wrongs, obscure fraud, or conceal crime. The 2016 A.G. Dillard v. Stonehaus decision confirmed the same standard applies to LLCs and allowed both traditional and reverse veil piercing claims to proceed.
Virginia’s Veil-Piercing Standard
Virginia applies an equitable, fact-specific test with no single determinative rule or criterion. The Supreme Court of Virginia has held that piercing the corporate veil is “an extraordinary exception” to limited liability. The standard requires showing (1) the unity of interest and ownership is such that the separate personalities of the entity and the individual no longer exist, and (2) adhering to that separateness would work an injustice. The entity must be shown to be “the alter ego, alias, stooge, or dummy” of the individuals, used to “disguise wrongs, obscure fraud, or conceal crime.” The same standard applies to piercing LLC veils as to corporations.
The leading case is A.G. Dillard, Inc. v. Stonehaus Construction, LLC, 291 Va. 39, 781 S.E.2d 547 (2016), which confirmed that the same veil-piercing standard applies to LLCs as to corporations and allowed both traditional and reverse veil-piercing claims to proceed.
Virginia is moderately strict on piercing. The “extraordinary exception” framing creates structural protection, but the equitable nature of the doctrine gives courts wide latitude when the facts support intervention.
Real Cases from Virginia
A.G. Dillard, Inc. v. Stonehaus Construction, LLC (Va., 2016)
Veil-piercing claims proceed — demurrer reversed
A.G. Dillard sought to collect a judgment against Stonehaus Construction, LLC, which was legally insolvent. Dillard sought to pierce the veil to reach the assets of owners Robert and Kendra Hauser and affiliated entities. The complaint alleged that Stonehaus and Robert Hauser were not separate personalities, Stonehaus had no bank account or assets, its funds had been siphoned off by Hauser, and it made no effort to collect money Hauser owed it. All related entities presented themselves under a single name and shared assets and employees interchangeably. The Supreme Court of Virginia reversed the circuit court’s demurrer, holding that Dillard adequately stated claims for both traditional veil piercing (through the Hausers) and reverse veil piercing (to reach the related entities through the Hausers). This was a landmark decision confirming that the same veil-piercing standard applies to LLCs as to corporations.
What governance records would have changed the outcome: Banking resolutions establishing separate bank accounts for the LLC, distribution authorizations documenting any funds paid to members, and annual written consents confirming the financial independence of the LLC would have prevented the findings of insolvency caused by siphoning. Officer appointment resolutions and separate governance for each related entity would have established the independent operation the court found lacking.
C.F. Trust, Inc. v. First Flight Ltd. Partnership (Va., 2003)
Veil NOT pierced — mere control insufficient
C.F. Trust, a creditor, sought to hold the members of an insolvent LLC personally liable for the LLC’s debts. The Virginia Supreme Court reaffirmed that piercing the corporate veil of an LLC requires the same showing as for a corporation: (1) the entity was the alter ego or instrumentality of its members, and (2) the entity was used to perpetrate fraud, injustice, or illegal activity. The court emphasized that merely showing domination or control is insufficient — the plaintiff must also demonstrate that the separate legal existence was used for an improper purpose. The court found that the plaintiff failed to meet this standard. This case established that Virginia applies a strict, two-prong test and that piercing remains an extraordinary remedy.
What governance records would have changed the outcome: The veil held in this case. The takeaway: the LLC’s limited liability was upheld because the plaintiff could not show the entity was used for an improper purpose. Annual written consents documenting legitimate business operations and single resolutions memorializing key business decisions would further strengthen an LLC’s defense against veil-piercing claims under this strict framework.
How to Protect Your LLC in Virginia
Virginia’s “extraordinary exception” framing is structural protection, but the A.G. Dillard case shows what triggers piercing: insolvency caused by siphoning, no separate accounts, related entities sharing assets and employees interchangeably. The defense is documentary — producing records that contradict each of those characterizations.
Banking resolutions establish separate bank accounts and authorize specific signers, addressing the “no bank account or assets” finding from A.G. Dillard. Distribution authorizations document any funds paid to members, addressing the siphoning concern. Annual written consents confirm the LLC’s financial independence. Officer appointment resolutions for each affiliated entity establish that related entities have separate governance — not the “single name, shared assets, shared employees” pattern the A.G. Dillard court rejected.
Without these records, your personal assets are exposed to traditional piercing — and your LLC’s assets are exposed to reverse piercing under the A.G. Dillard framework. The same documentary discipline defends both directions. Minutes.llc generates the governance documents Virginia courts examine, signs them with a digital corporate seal, hashes them, and stores them in a private offshore jurisdiction.
Not sure if your Operating Agreement covers these protections? Check your Operating Agreement for free at CheckMy.llc — it takes 5 minutes and shows you exactly which provisions are missing.
Frequently Asked Questions
Does Virginia require LLCs to keep meeting minutes?
Virginia LLC statutes do not specifically require meeting minutes. Virginia applies an equitable, fact-specific test with no single determinative rule. The A.G. Dillard decision confirmed the same standard applies to LLCs as to corporations — meaning records that document independent operation are valuable evidence on the unity-of-interest prong.
What is the standard for veil piercing in Virginia?
Virginia applies an equitable, fact-specific two-prong test: (1) the unity of interest and ownership is such that the separate personalities of the entity and the individual no longer exist; and (2) adhering to that separateness would work an injustice. The entity must be shown to be “the alter ego, alias, stooge, or dummy” of the individuals, used to disguise wrongs, obscure fraud, or conceal crime. The same standard applies to LLCs.
Can a single-member LLC be pierced in Virginia?
Yes. Virginia applies the same equitable analysis to single-member LLCs as to multi-member entities. The A.G. Dillard case allowed both traditional and reverse veil piercing claims to proceed against single owners using affiliated entities to shield assets. Documented governance separateness is the primary defense.
What records protect an LLC from veil piercing in Virginia?
Banking resolutions establishing separate bank accounts, distribution authorizations documenting proper member draws, and annual written consents confirming financial independence prevent the “siphoning” and “insolvency caused by siphoning” findings that triggered piercing in A.G. Dillard. Officer appointment resolutions documenting separate governance for related entities further demonstrate the independent operation Virginia courts examine.
Does Minutes.llc provide legal advice?
No. Minutes.llc is a document automation platform, not a law firm. The information on this page is for informational purposes only and does not constitute legal advice. Veil-piercing outcomes depend on specific facts and circumstances. Consult a licensed Virginia attorney for legal questions specific to your situation.
Related reading: All 50 states — veil-piercing guide · The 7 Risks of LLC Veil Piercing · Why Your LLC Needs a Banking Resolution · Governance Glossary
Don’t Be the LLC A.G. Dillard Pierced
The Virginia Supreme Court found Stonehaus had no bank account, siphoned funds, and shared everything with affiliated entities. Banking resolutions, distribution authorizations, and separate governance for each entity prevent that picture.
Create Your Record →Additional Virginia case law is being compiled and will be added to this page.
This page is for informational purposes only and does not constitute legal advice. The cases described are based on publicly available court opinions and legal analyses. Outcomes depend on specific facts and circumstances. Minutes.llc is not a law firm and does not provide legal advice. Consult a licensed attorney for legal questions specific to your situation.