law Law is a set of rules that are created and are enforceable by social or governmental institutions to regulate behavior,Robertson, ''Crimes against humanity'', 90. with its precise definition a matter of longstanding debate. It has been vari ...

, successor liability is liability (debt or other obligation) that is inherited by a successor entity after a corporate restructuring. Here, ‘successor’ refers to the entity that exists after the restructuring. ‘Restructuring’ refers to any action that alters the identity or character of a business entity (e.g. a merger). Successor liability is a subset of the law governing

corporate liability Corporate liability, also referred to as liability of legal persons, determines the extent to which a company as a legal person can be held liable for the acts and omissions of the natural persons it employs and, in some legal systems, for those o ...

or liability of legal persons. A

legal person In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for ...

is any

person A person (plural, : people) is a being that has certain capacities or attributes such as reason, morality, consciousness or self-consciousness, and being a part of a culturally established form of social relations such as kinship, ownership of pr ...

that can do the things a human person is able to do in law – such as enter into

contracts A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to ...

sue Sue or SUE may refer to: Music * Sue Records, an American record label * ''Sue'' (album), an album by Frazier Chorus * "Sue (Or in a Season of Crime)", a song by David Bowie Places * Sue Islet (Queensland), one of the Torres Straits islan ...

and be sued, own property, and so on. Depending on the

jurisdiction Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels. Ju ...

, entities such as corporations, other types of firm, partnerships and state-owned enterprises may be treated as legal persons, with both rights and responsibilities under law. Successor liability rules influence how these rights and responsibilities vis-a-vis others are influenced by corporate restructurings. Under corporate law (or possibly other bodies of law, such as employment or environmental law), some countries regulate how liability passes from a ‘predecessor’ entity to a 'successor' entity in the event of such corporate restructurings as a name change, merger or acquisition, division or dissolution. Following such restructurings, successor liability rules determine whether and how the 'successor' or acquiring entity must assume some or all of the predecessor entity's liabilities. Product liability, environmental clean-up, employment law and criminal law are some of the areas in which successor liability may enter into play. Thus, it is an important component of the legal system that supports the structural change needed in dynamic business sectors while also protecting individual and societal interests. While a restructuring does not automatically give rise to successor liability, the following situations are often considered to be relevant when determining whether or not such liability exists: there is an explicit agreement between the parties on the assumption of some liabilities; the restructuring is considered to be a ''de facto'' merger; the restructuring results in the mere continuation of the predecessor’s business; and the transaction underpinning the restructuring was fraudulent and used to escape liability. Without successor liability, a business entity may avoid liability by reorganising itself or otherwise altering its corporate identity. A comparative law study of successor liability in the context of enforcement of laws criminalising foreign bribery shows that countries have adopted widely different approaches to successor liability in a criminal law context. In some jurisdictions, it is not clear whether successor liability exists at all, opening up the possibility that even minor business reorganisations could 'wipe the slate clean' from the standpoint of criminal law enforcement. Other countries have comprehensive statutory frameworks that address successor liability. Still others rely on established jurisprudence or other legal principles as the legal foundation for successor liability.

References

{{reflist Civil law (legal system) Criminal law Corporate personhood