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Can one company own the software and another operate it? Both companies owned by one individual. Can suing the one that operates the software affect the one that owns the software?

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It is possible for one company to own the software and another company to operate it, even if both companies are owned by the same individual. This is a common business structure known as a holding company and operating company structure.

1. Holding Company and Operating Company Structure

A holding company is a company that owns shares in other companies. In this case, the holding company would own the software. An operating company is a company that conducts business operations. In this case, the operating company would operate the software.

1.1. Advantages of a Holding Company and Operating Company Structure

Limited Liability: The holding company and operating company are separate legal entities. This means that the liabilities of one company are not the liabilities of the other company. This can protect the individual's personal assets from liability.
Tax Advantages: The holding company and operating company can be structured in a way that minimizes taxes. For example, the holding company can be located in a tax haven, while the operating company can be located in a country with a lower corporate tax rate.
Flexibility: The holding company and operating company structure provides flexibility in terms of ownership and control. The individual can choose to sell or transfer ownership of the holding company or operating company separately.

1.2. Disadvantages of a Holding Company and Operating Company Structure

Complexity: Setting up and managing a holding company and operating company structure can be complex and expensive.
Regulatory Compliance: The holding company and operating company structure may be subject to additional regulatory compliance requirements.
Transparency: The holding company and operating company structure can make it difficult to track the flow of funds and assets.

2. Suing the Operating Company

If you sue the operating company, it is possible that the lawsuit could affect the holding company. This is because the holding company owns the operating company.

2.1. Piercing the Corporate Veil

In some cases, a court may "pierce the corporate veil" and hold the holding company liable for the debts of the operating company. This is more likely to happen if the holding company and operating company are not properly separated, or if the individual is using the holding company and operating company structure to defraud creditors.

2.2. Other Potential Impacts

Even if the court does not pierce the corporate veil, suing the operating company could still have an impact on the holding company. For example, if the operating company is found liable for damages, the holding company may be required to pay those damages. Additionally, the lawsuit could damage the reputation of both the holding company and the operating company.

3. Conclusion

In conclusion, it is possible for one company to own the software and another company to operate it, even if both companies are owned by the same individual. However, it is important to note that suing the operating company could have an impact on the holding company. The specific impact will depend on the facts of the case and the laws of Kenya.

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