Asked by Analise Johnson on Jul 09, 2024
Verified
Anderson incorporated his new company,Pearl,Inc. ,in the business of manufacturing rubber.After some years,he opened his own subsidiary rubber manufacturing company.The new subsidiary company is a success.Meanwhile,the workers of Pearl,Inc.claimed that payment of bonus is due and they are demanding the same from the subsidiary company.In this case,are both Pearl,Inc.and its subsidiary liable?
A) Yes,they are liable because it is provided under corporation law.
B) Yes,they are liable because both are the same entity in the eyes of the law.
C) No,they are not liable because it is not a subsidiary of Pearl,Inc.
D) No,they are not liable because a subsidiary is not liable for parent's debts as provided under the law.
Subsidiary Company
A company that is completely or partially owned and wholly controlled by another company, known as the parent company.
Corporation Law
The body of law that governs the formation, operation, and dissolution of corporations, including their rights and obligations.
- Acquire knowledge on the legal doctrine of piercing the corporate veil and the motivations for its use.
- Investigate the impact of business maneuvers on shareholders and creditors.
Verified Answer
PD
payton dorschJul 14, 2024
Final Answer :
D
Explanation :
Ordinarily,the parent is liable for its own obligations and the subsidiary is liable for its own obligations,but the parent is not liable for its subsidiary's debts and the subsidiary is not liable for the parent's debts.
Learning Objectives
- Acquire knowledge on the legal doctrine of piercing the corporate veil and the motivations for its use.
- Investigate the impact of business maneuvers on shareholders and creditors.
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