William is the CEO of ABC Company.William is concerned about hazardous waste that ABC generates.He decides to set up a subsidiary called Sub It Out and send all of the hazardous waste there.He plans,however,to have officials of ABC supervise and direct disposal operations at Sub It Out because he believes that some money can be made off of the waste product.William tells the board of directors that if things go bad with the subsidiary,then ABC Company can disavow any interest and stay out of trouble.Is William correct?

Question

Quizplus · Accepted Answer

William's plan of setting up a subsidiary and directing its operations to dispose of hazardous waste to make money is not enough to disavow any liability or responsibility of ABC Company for any violation of environmental laws. ABC Company could be held directly liable for any violations of Sub It Out based on the direction of ABC's officials. It is not relevant whether any director of ABC Company sits on the board of Sub It Out or whether the subsidiary is correctly set up under applicable tax laws.

William Is the CEO of ABC Company