Umbrella Corporation Explained

Umbrella Corporation Explained

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Umbrella Corporation Explained

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.

 

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