Without that legal fiction, new businesses would grind to a screeching halt

Thats not true though. The world abounded in businesses before the modern corporation and it will after.

There's no way that making the board or c-suite personally liable could increase the power of monopolies. It would encourage smaller corps with less centralized risk.

The answer is not letting any company grow into a monopoly. There are actual laws against that. Break up existing monopolies. Then make business owners way more accountable than they are today. I know it is hard to prove intent in fraud cases, but any sort of creative accounting, transfer of debt between companies, bonuses that aren't in alignment with company performance, stock buybacks and other manipulations of valuation, and a myriad other obvious fraudulent behaviors should be punished with long prison time.