Fill and Sign the Subsidiary Corporation Form

1.9.5.2 Miscellaneous Issues Alter Ego Subsidiary As Alter Ego Of Parent Corporation In this case the Plaintiff claims that [name of subsidiary] was a mere instrument or tool - - what the law calls the alter ego - - of its parent corporation, the Defendant [name of parent corporation], so that the separate status of [subsidiary] should be disregarded and the parent corporation [name], should be held legally responsible for the acts and transactions of its subsidiary, [name]. Under our free enterprise economic system, the law permits, even encourages, the formation of corporations as a means of attracting investments by stockholders, including other corporations, which can invest money in the subsidiary corporate enterprise without risking liability on its own part for the corporate acts and transactions of its subsidiary. In return, society gets the benefit of the jobs and other commercial activity generated by the business of the subsidiary. In most cases, therefore, the status of a subsidiary corporation as a separate legal entity apart from its parent corporation must be respected and preserved. This rule is not absolute, however, and the separate status of a subsidiary corporation can be disregarded where the parent corporation so controls the operation of the subsidiary corporation as to make the subsidiary a mere tool or instrumentality of the parent, and that control is used for the purpose of committing fraud or perpetrating the violation of a statutory or other legal duty. In deciding whether [name of subsidiary] should be treated in this case as the alter ego of its parent corporation, the Defendant [name], you should consider: (1) The history of the formation or acquisition of the subsidiary; (2) The business purpose or function of the subsidiary and whether that purpose is separate and distinct; (3) Whether separate corporate books and records were kept (even though joint tax returns may have been filed as required by law); (4) Whether the funds of the subsidiary were intermingled or not intermingled with the funds of the parent; and (5) Any other factor disclosed by the evidence tending to show that the subsidiary was or was not operated as an entity separate and apart from its parent. ANNOTATIONS AND COMMENTS To prove that a subsidiary should be treated as the alter ego of its parent corporation, it must be shown that the corporation so controls the operation of the subsidiary as to make it a mere instrumentality of the corporation, and that such control is used for the purpose of committing fraud or perpetrating the violation of a statutory or other legal duty. United Steelworkers of America, AFL-CIO-CLC v. Connors Steel Co., 855 F.2d 1499, 1505-06 (11th Cir. 1988), cert. denied, 489 U.S. 1096, 109 S.Ct. 1568, 103 L.Ed.2d 935 (1989) (federal common law).