The potential for abuse of the corporate form is greatest when the corporation is owned by a single shareholder. The evaluation of corporate control claims cannot, however, disregard the fact that, no different from other stockholders, a parent corporation is expected -- indeed, required -- to exert some control over its subsidiary. Limited liability is the rule, not the exception. Anderson v. Abbott, 321 U.S. 349, 362, 88 L. Ed. 793, 64 S. Ct. 531 (1944). However, when a corporation is so controlled as to be the alter ego or mere instrumentality of its stockholder, the corporate form may be disregarded in the interests of justice. Some variation of this theory of liability is recognized in all jurisdictions.
The totality of circumstances must be evaluated in determining whether a subsidiary may be found to be the alter ego or mere instrumentality of the parent corporation. Although the standards are not identical in each state, all jurisdictions require a showing of substantial domination. Among the factors to be considered are whether:
. the parent and the subsidiary have common directors or officers
. the parent and the subsidiary have common business departments