How The PlayStation Subsidiary remains separate Ran from Sony Corporation.

Many in my other blog post still , may not seem to get how the PlayStation LLC is allowed to remain Separate ran inside Sony Corporation.. This blog post is to show How.

A member was nice enough to post this counter argument for me:

Cobra951
[Short take: It makes no real difference, other than bean-counter and legal-dept headaches. The reality is that both divisions and wholly owned subsidiaries are part of the controlling entity--in this case, Sony.
That was my thought before doing a bit of searching, and now I've confirmed it.]

Actually it does make a difference and for many reasons you seem to not be aware of.

Well let's take the very main counter point to head by pointing out in very simple terms why it's not so easy to view such Corporation control & Management of a Subsidiary in that way..when you have set a Subsidiary in the Way PlayStation as a Subsidiary is set up.

First the main Sony Corporation board of Directors.

http://www.sony.net/SonyInf...

Now let's take a look at The PlayStation Subsidiary Corporation info & it's board of Directors .

Now if you notice

Outline of SIE LLC
1.
Name:
Sony Interactive Entertainment LLC
2.
Location:
San Mateo, California, the United States
3.
Principal of Business:
Research, development and sales of PlayStation®
hardware, software, content and network services
4.
Capital:
2 million USD
5.
Date of Incorporation:
Friday, April 1st of 2016
6.
Fiscal Year End:
March 31st
7.
Directors in Charge and Member of the Board: Reference below
Directors in Charge and Member of the Board of SIE LLC
Andrew House, President and Global CEO
Kazuo Miura, Deputy President
John (Tsuyoshi) Kodera, Deputy President
Kazuo Hirai
Kenichiro Yoshida

https://www.sony.com/en_us/...

Now say investors that own stock into the main Sony Corp want Sony to do something with the PlayStation LLC, but guess what, they can request, but since the only

Stock holder is an non alive Entity..IE:

the Sony Corporation itself..who sits on the board on The Sony Corporation? And who sits on the board of the PlayStation LLC?

IE: the Sony Corporation has a board and So does PlayStation LLC.. But Kaz sits on and among top on both companies board of Directors.

Investors & Stock holders of the main Sony Corporation has no say so or management of any or have any investments directly into the PlayStation LLC.

And since Kaz and the board are the representative of the Sony Corporation's invested interest into the PlayStation LLC , and the Head's of the board is the one who looks out for both companies vested interests are, you pretty much see they are both one and the same..

it is the board that gets to determine the control of PlayStation not investors or stock holders out side of the only one stock holder.

Which so happens to be in blunt terms a Corporation created Entity. Not even a live person.

Hedge fund manager asked Sony's board to have an initial public offering of the entertainment assets for 20% of the assets to atleast to be offered for public offering.. The board of directors gave a resounding vote of No..

Therefore, even a hedge fund management company with 7% controlling your interest into the entire Sony Corporation fails to have the board offer the entertainment assets for public offering, what does that tell you?

PlayStation LLC is generating profit and investments right back into not only itself, but has generated profits and new products to the market that has had high interest into the product on a consumer Level such as PSVR.

[TwoForce]

Interesting you wrote there. I think SIE can handle this on their own. I think PSVR will profit along with PS4.

[joeorc]

Thanks, if you go though the corporate structure time line of the Playstation's Subsidiary, you can see just how its not only structured but just how successful this CO venture was for Sony ..

In 1993

Sony Computer Entertainment Inc. (SCEI) is established as a joint venture between Sony Corporation and Sony Music Entertainment (Japan) Inc.

So when it was 1st established it was Incorporated right off the bat.

By may 1994

Sony Computer Entertainment America is established (A division of Sony Computer Entertainment Inc.)(CA, USA)

I think this is where many gamers and Media are getting confused..see , that's a Division of SCEI..Not the Sony Corporation..., it's been around as it's own Incorporated Subsidiary with its very own Divisions it has itself..lol

https://www.sie.com/en/corp...

[joeorc]

This also allows asset protection in the process.. Example: say is if Sony did ever decide to sell off the SIE LLC Subsidiary & all of the subsidiaries Holdings the PlayStation SIE LLC has, in stock certificate's you can have neat triggers built into the deal at the time of creation.

Example stock certificate front face
http://www.notarysuperstore...

Now what's also really important is the back of the certificate itself..and the filed business prospectuses and Corporation structure and if there is Corporation transaction triggers set up in contingency in..such and such case of examples for the Corpus request at the completion of the deal or even future deals!

What's in a friendly term or not so friendly term depending on which side your sitting on as Stock Buy- sale triggers..lol

And they can get real nasty in how they can be set up. And those triggers are very important.

http://www.wilaw.com/news-a...

Example:

https://www.lawinsider.com/...

If say for instance the Sony Corporation decided to vote and have SIE LLC go up for sale, SIE LLC could have a first Option buy - back - sell trigger in effect!

Thus in the case of a Hostile take over of say the Sony Corporation, and the current board of its Directors are disposed and are replaced and a vote was set to sell off its SIE LLC Subsidiary.. There could be a trigger in effect that allows SIE LLC to buy back it's stock off of The Sony Corporation at fair market Valuation of its created stock option when SIE LLC stock was first created...as in 1993 fair market Value not even the fair market Valuation of what it would be worth today!

It's pretty much the screw you to the corporation that wanted to go after your company in a bid for a Hostile take over.
And since Somthing like a Blind Trust, or a Subsidiary that has no public buy in you would not have an idea this first option : buy - back - sell through trigger is on or in effect until after you purchased said Corporation. And after the new board votes, and if SIE LLC decides to enforce that trigger.

It could decide to forego the trigger if SIE LLC decided..but it could decide to choose to use said trigger. For all we know it could even be an Auto trigger..yikes

[miyamoto]

RetributionStation 4

[dcbronco]

Joe I'm not sure what your point is, but LLC is usually done to limit exposure to legal action. It doesn't give a subsidiary the freedom to do whatever. It still answers to the board and that board is the same one representing Sony. If they didn't affect each other the Cell and bluray couldn't have nearly destroyed the company. Right now PlayStation money is a major factor in providing revenue. PlayStation profit will then be used wherever it's needed within the company. Not just for PlayStation.

[joeorc]

dcbronco22m ago
[Joe I'm not sure what your point is, but LLC is usually done to limit exposure to legal action. It doesn't give a subsidiary the freedom to do whatever. It still answers to the board and that board is the same one representing Sony. ]

Again read this:

"A subsidiary may be established with the specific intention of enabling a parent company to rely on the “corporate veil” to distance itself from potential legal liabilities that may arise in respect of a subsidiary company. In these circumstances, a parent company will look to demonstrate that the directors of the subsidiary operate independently and at arm’s length from the parent company."

Read it very carefully... Now read this:

[a parent company will look to demonstrate that the directors of the subsidiary operate independently and at arm’s length from the parent company. ]

This is most important:

"in making decisions affecting the subsidiary, the directors of the subsidiary are obliged to act in the best interests of the subsidiary - even where those interests conflict with those of the parent company or the broader corporate group. The obligation owed by a director of a wholly-owned subsidiary to act in the best interests of the subsidiary company takes precedence over the obligation of that director to act in the best interests of the parent company 1"

Both Kaz and Andrew both sit on the SIE LLC board of Directors, and the Sony Corporation board of Directors..

What may be important to the Main Sony Corporation body , may not be important to the SIE LLC body of board of Directors.. Since both sit on each board , they have to look at them as both separate companies..just because the stock holders of the main Corporation body hold Stock over the Sony Corporation body , has no real bearing on the SIE LLC because unlike Kaz and Andrew. They get no seat at the bard of SIE LLC, no Investors get a Seat At SIE LLC.

Cell and Blu-ray increased the over all cost for the PlayStation, did PlayStation produce those optical drives or did it have to buy those drives off of the main Sony Corporation?

Just because it has to buy those off a part of itself , does not mean it's free or it effects the SIE LLC like it would the main Sony Corporation Body.

It's way more complicated than many here seem to think. Trust me on this , many on here are not as familiar in corporation structure, and its pretty much evident.

Not an offense to you or anything, I'm just seeing with the responses I'm getting many have never it seems structure a Corporation before I have though..Multiples of them and you better be sure on how it's structured or your buts in a sling if you goof up.

[dcbronco]

Joe, PlayStation is a part of Sony's electronics division. All of their profits go to the parent company. If that wasn't the case the rest of Sony would have gone out of business a couple of years ago and the parts would have been sold off. Most don't make money. You're mistaking tax shelters for reality. Anyone that has read the business section of a newspaper over the last ten years knows none of those silly rules mean anything. Kaz was promoted to CEO, he didn't quit and then got hired at the parent company. Ken Kutaragi got "promoted" to a different job. It's strictly about tax shelters and limiting liability. If they were really looking out strictly for the subsidiary they would have voted to remove themselves from the parent company. PlayStation gaming stock would be very high, Sony stock very low.

Look at what many companies do now with inversions. They buy a small company in a country with favorable tax laws and then claim the subsidiary is the parent company for tax purposes. No one is under the delusion that the foreign company actually runs anything. It's just a loophole. One the government closes it they will find another. Don't let how it's supposed to be fool you from the reality. Sony Corp runs PlayStation. They ultimately make the decisions.