In a defective corporation where there was not good faith or proper formation, who may be personally liable?

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When a corporation isn’t formed properly or is used in bad faith, the protective shield of the corporate form can be disregarded through piercing the corporate veil. In those situations, the people who control or created the entity can be held personally liable for the corporation’s obligations. The idea is that the corporate form isn’t a shield for fraud, improper formation, or the misusing of the company to dodge responsibility. If there’s no good faith or proper formation, the individuals behind the corporation may be personally liable for its debts or obligations.

Normal limits on liability don’t apply here, which is why other options aren’t correct: the corporation isn’t automatically liable in every case, nor are shareholders always liable, and there is liability in cases where the veil can be pierced or the entity isn’t properly formed.