Answer:
Regardless of how closely-held a corporation is, it is a separate legal entity from the individual or individuals who own it. Corporations have boards of directors, shareholders, and perhaps most important, creditors, that have an interest in the assets of the corporation. Those parties would be adversely affected if corporate assets (funds in the corporate checking account) are used to cover an individual's overdrafts. In fact, if the corporation gets into trouble and can't satisfy the claims of its creditors and it can be shown that corporate funds were used to cover an individual's overdrafts, the corporation's creditors could take legal action to recover those funds from the individual and, in some cases, the bank that allowed the transfers to take place.
In order for the corporation to authorize transfers from its account to the account of the individual, the corporate directors would have to authorize such transfers. That could be a breach of their fiduciary duty to the corporation.
Summing up: It's just a poor idea and could result in losses for the bank.
First published on BankersOnline.com 6/27/11
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