Legal Question in Technology Law in New York

Re: Internet Corporation Subdivisions

The answer to your question depends upon the nature of your business and your goals in setting up subdivisions/separate corporations. Generally speaking, however, a subdivision of one company will not shield liability of another subdivision of the same company, i.e., a judgment would be against the company itself, for which it would have to pay out of corporate assets, which would affect the net worth of the "other" subdivision. Separate corporate entities would not face this problem.

One other point, however: Be sure to follow all corporate formalities, i.e., keep separate books & records, do not comingle funds, have board meetings, make sure your company is properly capitalized, etc., for you do not want to risk having a court disregard the corporate shield -- called "piercing the corporate veil" -- and assess liability on you personally.

-- Kenneth J. Ashman; Ashman Law Offices, LLC; 156 W. 56th Street, Suite 1902, New York, New York; [email protected]; www.lawyers.com/alo