A. A corporation that is related to another corporation by shareholdings or other means of control.
Listen to pronunciationLegal Definition - A corporation that is related to another corporation by shareholdings or other means of control; a subsidiary, parent, or sibling corporation. Black's Law Dictionary® Eighth Edition © 2004
Editor's Note - Have you read about the most recent corporate scandal in the US? Below in the Recent Usage section is a very clear description of the "stock option dating" issue that is causing problems for many corporations.
Recent Usage -
Two New Jersey companies announced Wednesday that some of their executives have run afoul of stock option dating regulations. Tyco International Ltd. said in an SEC filing that backdated options granted to a number of officers and directors would force it to restate financial statements by a total of $252 million for 1999 through 2002. Tyco, a West Windsor, N.J., electronic components manufacturer, said in its SEC Form 8-K report of "material events" that it did not intentionally misdate the options but that records were not adequately kept from 1999 to 2002. Consequently, its executive stock options were often priced as of the date they were delivered to recipients, instead of the date the grants were made, it said. A stock option generally gives a holder the right to buy shares at a specified price for a set period. Generally, this "strike price" is equal to the stock's price the day the option is created. If the stock price goes up later, the option holder makes money. But if the price falls below the exercise price, the stock option is worthless. In an effort to get around that, some companies backdated their options, reducing the strike price by resetting the creation date to one on which the stock traded at a lower price. This gave the stock option a built-in gain, but also required the companies to recognize the grant as compensation expense on their financial statements, reducing their reported net income. Other New Jersey companies that have been caught up in the options wave include Medarex Inc., Kos Pharmaceuticals Inc., Ulticom Inc., DRS Technologies Inc., Children's Place Retail Stores Inc. and Bed Bath & Beyond Inc. Ulticom and DRS say actions taken by their affiliates drew them into the probe. All the businesses say they are cooperating with authorities. by Martin C. Daks New Jersey Law Journal 11-17-2006 Read More...