WARNING: This is rather complex, but I hope that won't scare off some smart legal minds. Please offer your thoughts and expertise regarding the degree of legality within the following scenario:
Company A is a publicly listed parent of Company B which has lost millions of dollars for each of the past few financial years.
Four weeks before the end of the financial year, there is an announcement that Company A is to be bought out by Company C, a large multi-national. As part of this agreement, Company A's before-tax earnings for the financial year must not be below X million dollars. This would surely not be possible if Company B was still a subsidiary.
But fortunately one month before this announcement, Company B had been purchased by Company D - which is registered in a particularly notable overseas "tax haven" with lax requirements for business document lodgement. And Company D's owners (who are also the 2 new directors of Company B) are seemingly unrelated to anyone involved in the original holding company structure. However, it should be noted that the managing director of Company A remains as a director of Company B throughout this entire timeline.
After a few months, Company D registers its name in Australia.
A year passes and the 2 new directors of Company B resign and the parent (Company D) changes its trading name to one associated with a business owned/managed/run by the family members of Company B's remaining director who, as mentioned above, was the managing director of Company A - the holding company that flogged off Company B only a year or so beforehand!
And for good measure, one of these family members actually becomes a director and the secretary of Company B for a few months.
Can anyone provide the legal terms under Commercial Law for such behaviour and suggest how bad it is on a scale of 1 to10? I mean, I consider it to be incredibly dodgy, but I'm aware that company law doesn't always share my level of ethics.
Sorry, I know it's complicated, but I'm just the poor guy who stumbled across this.
Thanks (in advance!)
Company A is a publicly listed parent of Company B which has lost millions of dollars for each of the past few financial years.
Four weeks before the end of the financial year, there is an announcement that Company A is to be bought out by Company C, a large multi-national. As part of this agreement, Company A's before-tax earnings for the financial year must not be below X million dollars. This would surely not be possible if Company B was still a subsidiary.
But fortunately one month before this announcement, Company B had been purchased by Company D - which is registered in a particularly notable overseas "tax haven" with lax requirements for business document lodgement. And Company D's owners (who are also the 2 new directors of Company B) are seemingly unrelated to anyone involved in the original holding company structure. However, it should be noted that the managing director of Company A remains as a director of Company B throughout this entire timeline.
After a few months, Company D registers its name in Australia.
A year passes and the 2 new directors of Company B resign and the parent (Company D) changes its trading name to one associated with a business owned/managed/run by the family members of Company B's remaining director who, as mentioned above, was the managing director of Company A - the holding company that flogged off Company B only a year or so beforehand!
And for good measure, one of these family members actually becomes a director and the secretary of Company B for a few months.
Can anyone provide the legal terms under Commercial Law for such behaviour and suggest how bad it is on a scale of 1 to10? I mean, I consider it to be incredibly dodgy, but I'm aware that company law doesn't always share my level of ethics.
Sorry, I know it's complicated, but I'm just the poor guy who stumbled across this.
Thanks (in advance!)