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There are many reasons why a stan james promo code 2016 business enterprise may establish a subsidiary corporation.
Courts are not likely to permit a litigant to pierce the corporate veil of a corporation and reach the assets of its parent shareholder, unless it is abundantly clear that the two corporations were indistinguishable as separate corporate entities and are operating as one corporation.As long as the parent permits the subsidiary to act independently under the direction of its board, ideas for prank christmas gifts there is little risk to the parent of being found liable for the negligence or wrong-doing of the subsidiary.The term parent/subsidiary is not equivalent to the term parent/child.Not everyone is suited for being a director of a corporation.What Legal Risks Are Likely In The Parent/Subsidiary Relationship?Thus, not only should the subsidiarys directors waist trainer us discount code be selected with care, they should be schooled in a formal board training program which teaches individuals what they should know about being a director of a corporation.This is an important point.By selecting qualified, and to some extent indoctrinated, directors, the parent puts into place the subsidiarys board of directors.However, if the parent exercises excessive control over the subsidiary by,.g., commingling funds, interchanging employees, having its board serve as the board of the subsidiary, sharing office facilities, using a common letterhead, and otherwise blurring the distinctions between the parent and the subsidiary.A parent corporation may hold its subsidiary accountable for the expectations of its board of directors.
Since the parent retains voting control, it has the authority to select the subsidiarys directors.
A wrong-headed decision here risks mismanagement of the subsidiary.In this way, the litigant may seek payment of an unfunded liability of one corporation from another corporation.By holding,.e., owning all of the subsidiarys voting stock, the parent has the power to elect and remove the entire board of directors.Subsidiary Independence: A Stumbling Block?The matter of subsidiary independence is oftentimes a stumbling block to the parent business enterprise which may view an independent subsidiary as an uncontrolled subsidiary.As business enterprises have grown in size and complexity, it is not uncommon to find them owning and/or controlling one or more subsidiary corporations.This does not mean, however, that there is no communication between the subsidiarys CEO and the parent.
The parents selection of the subsidiarys directors is a critical exercise of authority.