Business Law: Subsidiaries vs. Branches
Added on 2020-05-28
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Running head: BUSINESS LAW1Business LawName:Institution:Date:
BUSINESS LAW2Question 1Could Spain have incorporated a subsidiary insted of a branchBike Monster NL which is a branch of the Spain company Bike Monster could be incorporated in the Netherlands insted of a branch. Legally, it is possible for companies to open subsidisaries of the Holding company in other countries like the netherlands where incorporation will start afresh. The principle of international commercial law is used to determine whether a company is registered as an on shore or an of shore company. The basic legislation is understandable that international business corporation( IBC) is of an offshore companyformed under some of the legislations as a tax neutral company is usually a limited company in terms of liabilities (Abbott, Pendlebury & Wardman, 2013). The activities it conducts is not necessarily in the jurisdiction it is registered. Taxation regimes also determines whether Bike Monster NL will be registered in the Netherlands having the controlled foreign corporation. Therefore, spain should have incorparated a subsidiary insted of a branch company for taxation purposes (Slorach & Ellis, n.d.).Question 2Difference between a branch of company and a companyThe main difference between a company and a branch of company is that a company is a indepedent legal company or a subsidiary whereas a branch of company is not an indepedent legal company. A branch company has the same legal identity as the parent of mother
BUSINESS LAW3company (Allison & Prentice, 2009). This should be taken into consideration. A branch company cannot exist and operate without a parent company approval due to the principles ofa legal entity. For operationalization of a branch office, the foreign company must also be operating in the same jurisdiction.Question 3Expeceted defendant in the anticipated lawsuitEmma van der Berg wants to sue a company for the injuries sustained from the rented bike. Bike Monster NL is a subsidiary of the parent company and therefore should be sued. It is a subsidiary and not a branch. In case of a branch of a company, the parent company which is foreign should take the responsibility while if the company is a subsidiary, it has its own legalrights and representation. The legal liability cannot be abdicated to the parent company and therefore the subsidiary Bike Monster NL should be fully liable and compensate Emma for the injuries sustained (Cox & Hazen, 2012). A branch company has the same legal identity asthe parent of mother company. This should be taken into consideration.Question 4Please, explain if, why, and how can Bike Monster Mexico be implicated in the lawsuit launched by Emma van der Berg.A subsidiary company is an independent legal entity, therefore, Bike Monster NL being an independent legal entity acts on its own even if the day to day decisions are maybe from the parent company. The basic rule in corporation law is that parent companies are not liable for the acts of their subsidiaries (Cox & Hazen, 2012). However, Bike Monster Mexico can be implicated in the lawsuit if the law supports piercing of the corporate veil. If Bike Monster
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