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Simple English definitions for legal terms
mere-continuation doctrine
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A quick definition of mere-continuation doctrine:
The mere-continuation doctrine is a rule that says if one company transfers all its assets to another company and only one company remains, the new company will be responsible for the old company's actions if they have the same owners and management. This means that the new company is seen as a continuation of the old company and can be held accountable for any legal issues that the old company had.
A more thorough explanation:
The mere-continuation doctrine is a legal principle that holds a successor corporation responsible for the actions of a predecessor corporation if only one corporation remains after the transfer of assets, and both corporations share an identity of stock, shareholders, and directors. This is also known as the continuity-of-entity doctrine.
For example, if Company A sells all of its assets to Company B and then dissolves, but Company B continues to operate the same business with the same management and ownership structure, then Company B may be held liable for any legal claims against Company A.
Another example would be if a company changes its name or merges with another company, but the new entity continues to operate the same business with the same management and ownership structure. In this case, the new entity may also be held liable for any legal claims against the original company.
These examples illustrate how the mere-continuation doctrine can be applied to hold a successor corporation responsible for the actions of a predecessor corporation when there is a continuity of ownership and management between the two entities.