A parent company is a type of company that owns sufficient voting stock in another company, allowing them to control certain operations of the company. This can happen due to the parent company having management responsibilities or influence over the board of directors of the second company. In these cases, the second company is referred to as the "subsidiary" of the parent company.
The laws regarding parent and subsidiary companies will vary widely by jurisdiction. Parent/subsidiary company arrangements are governed by various state and federal laws. Also, the two companies will generally arrange the relationship according to the terms set out in a business contract.
What Are some Common Legal Disputes with Parent Companies?
Having a parent/subsidiary arrangement can be beneficial for all the companies and employees involved. However, they can often give rise to various legal disputes and issues. These can include:
- Business takeovers
- Stock disputes
- Division of property
- Disputes over management and control of the business enterprises
- Issues with securities fraud and other illegal activities
These types of disputes can often involve federal violations (especially those involving stocks and securities). These types of legal conflicts generally need to be reported to outside agencies so that they can be resolved. More serious conflicts can result in lawsuits between the affected parties.
Do I Need a Lawyer for Help with Parent Company Laws?
Parent company laws can affect the relationship between businesses that are seeking to work together. You may need to hire a business lawyer if you have any business disputes or conflicts. Your attorney can provide you with the type of legal representation that is needed to succeed on your claim. Also, your lawyer can provide advice if you feel that you have been affected by a business violation.