Entity Separateness Clause Samples
The Entity Separateness clause establishes that each party or entity involved in an agreement is considered legally distinct and independent from the others. In practice, this means that the rights, obligations, and liabilities of one entity do not automatically transfer to or affect another entity, even if they are related or affiliated. For example, if a parent company and its subsidiary both sign a contract, this clause ensures that only the specific entity named is responsible for its own commitments. The core function of this clause is to prevent confusion or unintended liability by clearly delineating the boundaries between different legal entities.
Entity Separateness. (a) The Borrower covenants to take the following actions, and the Servicer covenants to cause the Borrower to take the following actions: The Borrower shall at all times maintain at least one Independent Manager (as such term is defined in the Charter).
(b) The Borrower shall not direct or participate in the management of any of the operations of the Other Companies.
(c) The Borrower shall allocate fairly and reasonably any overhead for shared office space. The Borrower shall have stationery and other business forms separate from that of the Other Companies.
(d) The Borrower shall at all times be adequately capitalized in light of its contemplated business.
(e) The Borrower shall at all times provide for its own operating expenses and liabilities from its own funds.
(f) The Borrower shall maintain its assets and transactions separately from those of the Other Companies and reflect such assets and transactions in financial statements separate and distinct from those of the Other Companies and evidence such assets and transactions by appropriate entries in books and records separate and distinct from those of the Other Companies. The Borrower shall hold itself out to the public under the Borrower’s own name as a legal entity separate and distinct from the Other Companies. The Borrower shall not hold itself out as having agreed to pay, or as being liable, primarily or secondarily, for, any obligations of the Other Companies.
(g) The Borrower shall not maintain any joint account with any Other Company or become liable as a guarantor or otherwise with respect to any Indebtedness or contractual obligation of any Other Company.
(h) The Borrower shall not ▇▇▇▇▇ ▇ ▇▇▇▇ on any of its assets to secure any obligation of any Other Company.
(i) The Borrower shall not make loans, advances or otherwise extend credit to any of the Other Companies.
(j) The Borrower shall conduct its business in its own name and strictly comply with all organizational formalities to maintain its separate existence.
(k) The Borrower shall have bills of sale (or similar instruments of assignment) and, if appropriate, UCC1 financing statements, with respect to all assets purchased from any of the Other Companies.
(l) The Borrower shall not engage in any transaction with any of the Other Companies, except as permitted by this Agreement or the Charter and as contemplated by the Repurchase Agreement.
Entity Separateness. Borrower has maintained and shall maintain, for the duration of the Loans, its separateness as an independent, special purpose business entity and shall adhere at all times to the Borrower’s purpose set forth in its articles of incorporation. In doing so, in addition to the covenants set forth in Sections 4.02, 4.04, 4.05, 4.10 and Sections 5.01 through 5.08 hereof, Borrower shall (a) comply with the provisions of Title 56 of the Code of Virginia (1950), as amended, to which Borrower is subject and with any regulations promulgated by the Virginia State Corporation Commission to which Borrower is subject, except to the extent Borrower may be diligently pursuing any remedial or corrective action recommended or required by any regulatory agency with oversight over Borrower, (b) comply with the formalities established by Borrower’s articles of incorporation, bylaws, resolutions and other charter documents, (c) not commingle its funds or assets with those of any other person or entity, (d) remain solvent, maintain adequate capital in light of its contemplated business operations, (e) not fail to correct any known misunderstanding regarding the separate identity of the Borrower, and (f) maintain an arm’s-length relationship with any person or entity controlled by or under common control with the Borrower. The Bank has entered into the Loans in conclusive reliance upon the undertakings described in this Section 4.11.