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.
South Dakota Continuing Guaranty of Business Indebtedness By Corporate Stockholders is a legal agreement wherein corporate stockholders in South Dakota assume responsibility for the indebtedness of a business. This type of guaranty serves as a financial backup for creditors and lenders, providing them with assurance that the stockholders are willing to personally guarantee the repayment of the business's debts if the business defaults on its obligations. South Dakota law recognizes several types of Continuing Guaranty of Business Indebtedness By Corporate Stockholders: 1. Unlimited Guaranty: This type of guaranty holds the stockholders personally liable for the entire outstanding indebtedness of the business. It means that if the business defaults on its obligations, the stockholders are responsible for repaying the full amount owed, without any limitations or caps. 2. Limited Guaranty: In this case, the stockholders' liability is limited to a specific amount or a set percentage of the business's outstanding indebtedness. The liability is restricted to the stated limit, beyond which the stockholders are not obligated to repay the debts. 3. Joint and Several guaranties: This form of guaranty holds multiple stockholders collectively and individually liable for the business's debts. Each stockholder shares responsibility for the entire debt, meaning creditors can pursue any or all of the guarantors for repayment. 4. Several guaranties: Unlike joint and several guaranties, several guaranties allows creditors to only pursue specific stockholders for repayment, based on their predefined agreement. If the business defaults, the designated stockholders are held liable for the debts, while other guarantors may be exempt from repayment obligations. It is essential for corporate stockholders in South Dakota to carefully review and understand the terms and conditions outlined in the Continuing Guaranty agreement. Seeking legal advice from a qualified attorney with expertise in business and corporate law is highly recommended before entering into any financial obligations.
