Also known as: parent corporations · parent company
Written by attorneys · grounded in primary & secondary sources — see below
A corporation that owns a controlling interest in the stock of one or more other corporations. The parent may consolidate assets of a subsidiary for statutory purposes. A nongovernmental corporate party must identify any parent corporation in federal district-court filings.
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Pinnacle Holdings faces federal criminal charges as a defendant. Its counsel prepares the required corporate disclosure statement and lists Progressive Healthcare as the parent that owns 85 percent of its shares. The filing satisfies the rule because it identifies the parent corporation that controls the defendant entity.
Santa Fe Industries owns 95 percent of Kirby Lumber stock. It approves a short-form merger under Delaware law to eliminate the remaining minority shareholders. The parent corporation exercises its statutory power to complete the transaction without subsidiary board or shareholder approval.
Daimler AG maintains a U.S. subsidiary that sells vehicles in California. Plaintiffs sue the German parent for events occurring abroad. The court refuses to treat the subsidiary's contacts as sufficient to confer general jurisdiction over the parent corporation.
Eastern Air Lines contracts with Gulf Oil for fuel supply. Gulf routes sales through offshore subsidiaries to shift profits to the parent corporation. The court examines the parent's control over pricing decisions when assessing contract performance.
Mitsubishi Motors owns a controlling stake in a Puerto Rican distributor. The parent corporation seeks to compel arbitration of antitrust claims under the distribution agreement. The court enforces the clause because the parent is bound by the subsidiary's contractual commitments.
Goodyear Dunlop Tires Operations maintains a U.S. parent with foreign subsidiaries. Plaintiffs sue the parent in North Carolina after a foreign accident. The court holds that the parent's ownership alone does not create jurisdiction over claims unrelated to the forum.
A nongovernmental corporate party must file a statement identifying any parent corporation or publicly held owner of 10 percent or more of its stock. The requirement applies in both civil and criminal proceedings and ensures the court knows the true ownership structure.
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…Id. , at 418. Most recently, in Goodyear , we answered the question: “Are foreign subsidiaries of a United States parent corporation amenable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum State?” 564 U. S., at (slip op., at 1). That case arose from a bus accident outside…
…Fe availed itself of § 253 of the Delaware Corporation Law, known as the “short-form merger” statute. Section 253 permits a
…part of its control or to share it with a foreign State" (p. 310); that, although the Russian decree effected the death of the parent company
…vice president (1955), Donahue never participated in the “management” aspect of the business. In the years preceding 1955, the
…to obtain favorable tax treatment for the purpose of maximizing the advantages to the corporation
No. Jurisdiction over a subsidiary does not automatically confer jurisdiction over the parent even when the parent owns all the stock. Jurisdiction over the parent arises only when the parent directs the subsidiary's acts in the state or dominates it so completely that the subsidiary's separate existence is disregarded.
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The assets of a direct or indirect consolidated subsidiary count as assets of the parent for purposes of determining whether the transaction requires shareholder approval. This consolidation prevents a parent from evading the statutory threshold by moving assets into controlled entities.
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Yes when the parent dominates the subsidiary, fails to observe corporate formalities, siphons funds, and leaves the subsidiary undercapitalized. Courts examine the totality of circumstances to decide whether the subsidiary functioned as a mere facade for the parent's operations.
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The parent must notify each minority shareholder of the subsidiary within ten days after the merger becomes effective. Failure to use reasonably calculated means to reach every shareholder can invalidate the notice even if the parent acts within the statutory window.
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