Umbrella corporations are those corporations
which cover many smaller corporations. For example, an umbrella corporation may
provide services, such as legal services, for the smaller companies which are
protected by the umbrella corporation.
In most cases, an umbrella corporation is
utilized as part of a large structure of corporations in order to provide
services, protection and financing to smaller companies found under the
umbrella of that large corporation.
In some cases, a corporate umbrella is used
to cover the larger part of the corporate structure which has several brands
below it. For example, the corporate umbrella may be
named as the distributor of many different brand name
products.
For example, X Corporation may be a
distributor for the products of both Y and Z products. That distributor
protects the smaller corporations, as well as handles much of the financial
issues for those smaller corporations. By taking on the liability and other
issues, the distributor also takes a large percentage of the profits from the
distribution of those products.
There are many benefits associated with an
umbrella corporation, including legal liability issues such as those which may
occur with a recall of a product distributed by that corporation. In addition,
the companies which fall under that umbrella may also enjoy discounted services
because of the bulk of business is conducted
by the umbrella corporation, such as insurance and payroll services.
