related entity
Definition
A related entity is a business or organization that has a meaningful ownership or control connection to another business, such as a parent company, a subsidiary, or a sister company owned by the same person or group. Courts and regulators look at the real-world relationships between businesses rather than just their separate legal names, so two companies run by the same family or investor group would typically qualify as related entities.
Example
If you own both a bakery LLC and a catering company LLC, those two businesses are related entities because the same owner controls both of them.
Watch Out
Contracts often restrict what you can do with related entities, so a non-compete clause or confidentiality agreement that covers related entities could limit your entire group of businesses, not just the one that signed the deal.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.