Also known as: parent companies · parent corporation
Written by attorneys · grounded in primary & secondary sources — see below
A corporation that possesses the power to elect a majority of the directors of another corporation and thereby exercises working control over it.
Prime Logistics faces federal criminal charges for regulatory violations. Its counsel prepares the required corporate disclosure statement and lists Prosperity Investments as the entity that elects the majority of its board. The filing satisfies the rule because Prosperity Investments qualifies as the parent company under the ownership test.
Paul Peterson works at a news organization whose parent company owns the publication. He misappropriates nonpublic information from the parent company's files and trades on it. The parent company's ownership and control establish the chain of confidentiality that supports the misappropriation claim against him.
Select any source to read its text and confirm it supports the definition.
Pierce Patterson holds shares in a small operating company. Prosperity Investments, the parent company, approves a merger that eliminates the minority stake without a subsidiary-level vote. The parent company's dominant ownership allows it to dictate the transaction terms under the short-form merger statute.
Pamela Phillips owns minority shares in a subsidiary. The parent company, Precision Tools, causes the subsidiary to repurchase shares at a low price that benefits only the parent. The parent company's control triggers entire-fairness review of the self-dealing transaction.
Parker Phillips receives notice that Pioneer Energy, the parent company, has merged its 92-percent-owned subsidiary into itself. He claims the transaction lacked proper disclosure. The parent company's statutory power to effect the merger without subsidiary approval determines the validity of the squeeze-out.
Priscilla Parks sues a German manufacturer in state court for injuries occurring abroad. The plaintiff relies on the manufacturer's wholly owned U.S. subsidiary that conducts sales in the forum. The parent company's lack of direct contacts and failure to dominate the subsidiary prevent the court from exercising general jurisdiction over the parent.
A parent company exists when one corporation can elect a majority of another's directors, which typically occurs through direct or indirect ownership of a controlling equity interest.
Supporting sources
Any nongovernmental corporate party must file a statement identifying its parent corporation or state that none exists under the applicable criminal procedure rule.
No. Jurisdiction over a subsidiary does not by itself confer jurisdiction over the parent even when the parent owns all the subsidiary's stock, unless the parent controls and dominates the subsidiary so as to disregard its separate existence.
A parent that dominates a subsidiary owes fiduciary duties and must satisfy entire fairness review in self-dealing transactions with the subsidiary.
A corporation may transfer any or all assets to a wholly owned subsidiary without shareholder approval because the recipient remains under the parent's complete ownership.
…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…