Litigation Risks: Shared online presence with overseas subsidiary companies

Corporate companies are subject to increasing risk of being exposed to or otherwise dragged into unnecessary litigation in maintaining the same websites and sharing the same social media points with subsidiary companies based in overseas locations. Technically, these overseas corporations may be separate legal entities, however, due to their world wide web presence, they appear and represent to the world as being one and the same.

An Australian company, for example, may have an affiliate company in the United States of America. Litigation involving the American counterpart may arise. The opposing party in that litigation may require documents or other evidence to be produced by the Australian company. Whilst technically, the two entities may be separate, their online presence gives public the impression that the two companies are one and the same or otherwise very closely related. This may lead to unnecessary, expensive and protracted efforts on the part of the Australian entity having to be engaged in litigation in the States in a proceeding that they are (rightly or wrongly) a party to.

What safeguards can you put in place to protect your locally based company from foreign subsidiary online activity

Online branding and social media presence is necessary in today’s world. However, there are precautions and safeguards relevant companies can take to avoid the exposure of foreign litigation:

  1. On the Australian company’s website, any foreign subsidiaries should not be listed as units or divisions of the company or vice versa. All entities must be clearly, distinctively, and convincingly listed as separate legal entities.
  2. The Australian company and any foreign subsidiaries should not have the same officials, executives, or board members.
  3. All the social media profiles of the various entities should be kept separate and distinct from each other.
  4. Business cards, email signatures and letterheads should reflect the appropriate name of each entity for which it is being circulated and not any unifying identity.
  5. Employees and users should be involved with formal social media training and information usage. A formal audit should be conducted to periodically monitor and check the company’s website, subsidiaries’ websites and social media pages, and employees’ (of each of the Australian company and the subsidiaries) social media activity.

The preparation of a formal corporate social media policy and branding policy is a worthwhile consideration in an effort to support the clear distinction between the various companies and entities.  In a lot of circumstances this type of protective documentation is only considered after a claim has been made against a business.  Being proactive is the wisest course of action.

At Burke Lawyers our Commercial Lawyers have extensive experience providing advice and support to set up the most appropriate corporate social media and online branding policies.

If you do find yourself in a situation where a claim has been made against your company, our Dispute Resolution Lawyers Meghan Warren and Rosy Dean (nee Rosy Roberts) will be able to provide advice on the best course of action.  Contact us today on +61 3 9822 8588 to find out how we can help you.

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