Why should you avoid having dual directors and officers in a parent/subsidiary situation?



Answers:
shared management of a parent and subsidiary could provide grounds to pierce the corporate veil and hold the parent liable for acts and debts of the subsidiary

Dual directors in this situation is known to as "interlocking" boards of directors and can give support to an argument by a party seeking to hold the parent liable for the acts and liabilities of the subsidiary. This is sometimes referred to as "piercing the corporate veil". The idea is that if the parent does not respect the subsidiary as a separate entity, the law will not respect that "separateness" either. Adam Fullman

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