Advisory Case on Reviewing Legal Risks and Restructuring HR and Labor Arrangements Arising from One Representative Director Operating Multiple Companies

1. The Client's Situation

The client was a corporate group in which the same representative director operated multiple corporations, and it had a structure in which the operation of personnel and the separation of businesses among the corporations were not clear in practice. In particular, as the form in which an employee belonging to a particular corporation worked at the business site of another affiliate was repeated, concerns arose regarding the attribution of liability when damage occurred, whether it constituted dispatch of workers, and the legality of transfers. In addition, due to transactions among affiliates and the representative director's concurrent positions, there was a need for a prior check on the possibility that liability could expand into issues such as piercing the corporate veil and conflicts of interest in the future. The client requested advice in order to systematically organize these compound risks and to establish a stable group operating structure over the medium to long term.

On the premise that each corporation in principle has an independent legal personality, Your Legal Team conducted a structural review focusing on the risk factors that could exceptionally expand liability. Regarding the form of employees working at affiliates, we reviewed which type the current mode of operation fell under, based on the legal criteria distinguishing dispatch from transfer, and organized a direction for personnel operation that could minimize the room for illegality. Furthermore, we presented the consent procedures and the matters requiring internal document maintenance necessary to operate transfers lawfully, and comprehensively advised on the key points of caution that frequently arise when operating multiple corporations, relating to the representative director's concurrent positions, transactions among affiliates, and the separation of HR and labor management.

By clearly recognizing the scope of liability of each corporation and the structure of personnel operation, the client established criteria able to preempt the possibility of unnecessary legal disputes. In particular, it organized the elements that could be misperceived as dispatch in the future in relation to employee transfers, and gained an opportunity to maintain internal consent procedures and operating principles. The client also secured a practical guide enabling it to preemptively manage risks that could arise in the course of operating multiple corporations, such as expansion of the representative director's personal liability and the voidness of transactions among affiliates.