Full question:
Husband and wife own separate corporate entities but carry out the same work, husband files to take ownership of wife's company stating that wife's company is a subsidiary of the husbands company and attempts to assume the assets and liabilities of same in a divorce action. What defines a subsidiary under NYS corporate law?
- Category: Corporations
- Date:
- State: New York
Answer:
Under New York State tax law, a subsidiary is defined as a corporation where the parent company owns more than fifty percent of the voting shares (N.Y. Tax Law § 1450[d]). This means that the parent company has control over the subsidiary through its ownership of the majority of shares that allow for voting in the election of directors or trustees.
Additionally, a parent corporation can merge with its subsidiary if it owns at least ninety percent of the outstanding shares of the subsidiary (N.Y. Bus. Corp. Law § 905). This allows the parent company to assume the assets and liabilities of the subsidiary without needing shareholder approval.
In summary, a subsidiary is primarily defined by the ownership structure, specifically the percentage of shares held by the parent corporation.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.