I know for a fact, that a Flipper Corporation I'll call "Jones Inc", that bought a local property at auction, contracts, and has either paid or currently pays all of it's employees to manage and flip the property under "Smith Inc", the Head Corporate Flipper that owns Jones as a Subsidiary. It looks like the only things done under Jones so far, was to buy the property at auction, then be the listed owner on the filed Deed of Transfer with the county assessor, everything else is being done under Smith as the property is being renovated before they list it.
I thought the basic idea of a Subsidiary, was that it should be run 100% independently apart from it's corporate head owner, with it's employees payroll,etc.,, under the Subsidiary name, to avoid a monopoly and anti-trust issues. So based on the scenario I described, is what Smith has done and is still doing legal? It seems to defeat the purpose...
The amount of overlap between parent-subsidiary or sister companies is the key. The law outlines a number of factors to consider, such as commingling funds, maintaining separate books, whether business transactions between the companies are based on an "arms-length" terms (terms you would expect between unrelated companies), and so on. Common or related ownership is only one factor, and not enough in itself to reach the assets of the parent (or sister, or owners) to pay the debts of the other. I advise my business clients to keep as much separation as possible. If it looks like a duck, walks like a duck, quacks like a duck ....
You have a basic misconception. A subsidiary company exists just to do what the owner of the company wants and the owner is the parent company. If either company is violating the law they both should be sued. But what they are doing is normal and does not appear on its face to violate the law.
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Not necessarily. Subsidiaries often have board members who serve on both boards and employees that are employed by both corporations
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