Cranford, NJ asked in Business Formation and Business Law for New Jersey

Q: Are we a true subsidiary? If not could we break away?

Our Japanese parent company, started this subsidiary back in the 80's. We purchase their products from them, pay them in full, and don't share the revenue from the deals that are made. That is the extent of the relationship. What really makes me question if we are a legitimate subsidiary is another company that was started in Korea. Ties have apparently been cut with them, and no one on the Japanese side nor the american side speak of it. Seems like a touchy subject. They still, however, use the company's logo and name, and pretty sure have the same deal of purchasing material through the parent company. But they are truly their own entity. How is this possible and can it be replicated?

3 Lawyer Answers

H. Scott Aalsberg Esq.

Answered
  • East Brunswick, NJ
  • Licensed in New Jersey

A: A lawyer would need to review at a minimum the formation documents for the business.

Leonard R. Boyer agrees with this answer

Leonard R. Boyer

Answered
  • Brooklyn, NY
  • Licensed in New Jersey

A: You need to have an in person consultation and extensive document review, to make that determination and to find out exactly what you can and cannot do. You need a law firm that has both civil litigation and intellectual property experience. Pick the best lawyer you can find and remember one rule: a good lawyer is generally never cheap, and a cheap lawyer is generally never good so don't choose based on price.

Emmanuel Coffy

Answered
  • Maplewood, NJ
  • Licensed in New Jersey

A: I agree with my colleagues that your issue being fact specific requires extensive document review to make a determination. For example, the entity may be a subsidiary, an affiliate or an associate. Accordingly, you should consult a lawyer to help you determine the status of your entity. Good luck.

Leonard R. Boyer agrees with this answer

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