A corporation is an artificial person that is created by governmental action. The corporation exists in the eyes of the law as a person, separate and distinct from the persons who own the corporation (i.e., the stockholders). This means that the property of the corporation is not owned by the stockholders, but by the corporation. Debts of the corporation are debts of this artificial person, and not of the persons running the corporation or owning shares of stock in it. The shareholders cannot normally be sued as to corporate liabilities. However, in this guaranty, the stockholders of a corporation are personally guaranteeing the debt of the corporation in which they own shares.
The Wisconsin Continuing Guaranty of Business Indebtedness by Corporate Stockholders is a legal contract that outlines the obligations of corporate stockholders to guarantee the indebtedness of a business. This guarantee ensures that the creditors of the business have an additional source of repayment in case the business defaults on its loans or other financial obligations. In Wisconsin, there are different types of continuing guaranties by corporate stockholders that may be used depending on the specific circumstances and requirements. Some common types include: 1. Absolute Guaranty: This type of guaranty holds the stockholders personally responsible for the full amount of the business's indebtedness. In case of default, the creditors can seek repayment directly from the stockholders without having to exhaust remedies against the business first. 2. Limited Guaranty: Unlike the absolute guaranty, this type limits the stockholders' responsibility to a specific amount or time period. The guarantor's liability is restricted to the predetermined limit, and the creditors can only seek repayment up to that limit. 3. Continuing Guaranty: This type of guaranty extends beyond a one-time loan or transaction. It covers all present and future debts or obligations of the business until the guarantor's obligations are fulfilled or terminated. This means that even if the business takes on additional debt or financial obligations in the future, the guarantor remains responsible for them. 4. Joint and Several guaranties: In this type, multiple stockholders collectively guarantee the business's indebtedness. Each guarantor is individually responsible for the entire amount owed, meaning that if one guarantor defaults, the others are bound to cover the shortfall. It is important for corporate stockholders in Wisconsin to fully understand the implications of entering into a continuing guaranty of business indebtedness. They should consult with legal professionals and carefully review the terms and conditions of the guaranty agreement before signing. It is also advisable for businesses to maintain accurate records of the guaranty and regularly assess the financial health of their stockholders to mitigate potential risks and ensure compliance with legal obligations.
