Asked October 07, 2016

Contractual terms where parent company starting new business

  • 1 Answer

Hi, I want to understand the contractual terms that should be kept in mind for a situation where the parent company, holding a majority stake in one of its subsidiaries is setting up a new business which has a potential risk of cannibalizing the sales of its existing subsidiary. Thanks

Answer 1

There are no such specific provision under the Company law. You will have to frame the sales and marketing strategy in a manner that the two businesses flourish independently. You may want to keep the products/services different of the two. You can clarify certain details in the agreement such as purpose of the business and the structure.This way there will be chances of conflict in the sales of the two businesses.

Agree Comment 0 Agrees almost 5 years ago

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