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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
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Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Hello, I am curious how one would go ahead with creating

Resolved Question:

Hello,

I am curious how one would go ahead with creating multiple companies that would do some business with each other.

example: company A has a need for technical development of a new system, so company A would pay company B. This system would be developed by company B. Since the product vision and idea was company A's, company B would then pay risiduals to company A if that product was sold to another party.

Now my question is can an owner of company A have a vested interest in company B and visa versa. I did research a while ago and i thought it came down to "how much of a vested interest" each person had before it was a conflict of interest or reporting the income/expenses for each had to be disclosed in a certain manner?
Submitted: 3 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 3 years ago.
There is no conflict of interest in the system you describe and it is done all of the time. You can create multiple companies to do business with one another and there is no vested interest maximums of ownership. What happens for example is company A will be formed, they will own the patent or copyright on some item. Then they form Company B which they will use to manufacture the item and sell it sometimes to even Company C which will then distribute the product. All of these companies can have the exact same owners and as long as they keep separate bank accounts and separate functions, they are considered separate companies and each has its own function even though it is owned by the same person or persons.


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Customer: replied 3 years ago.

I am very satisfied with your answer just alittle more to add to clairify...

 

So person A could have 50% ownership of company A, that does business with company B he may only have 10-20% interest in?

 

Also how does it look if a married couple has seperate interest, wife 10%, husband 25%, does that get viewed as one? or do they maintain there indivdiaulity?

 

And lets say as a business manager i consult with both for a fee? still no conflict?

Expert:  Law Educator, Esq. replied 3 years ago.
Yes as long as the board of each company are aware of the ownership there is no problem with this. The married couple is seen as individual ownership. As far as consulting for both companies that is permissible as long as you are paid by each company separately.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 92567
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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