trust fund doctrine

noun

: a doctrine holding that shareholders to whom assets of an insolvent corporation have been transferred are liable to creditors upon dissolution of the corporation
broadly : a doctrine holding that corporate assets are held as a trust fund for the benefit of shareholders and creditors and that corporate officers have a fiduciary duty to deal with them properly

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Cite this Entry

“Trust fund doctrine.” Merriam-Webster.com Legal Dictionary, Merriam-Webster, https://www.merriam-webster.com/legal/trust%20fund%20doctrine. Accessed 26 Apr. 2024.

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