Legal Definitions - continuity-of-entity doctrine

The continuity-of-entity doctrine, also known as the mere-continuation doctrine, is a legal principle that holds a successor corporationresponsible for the actions of a predecessor corporation if only one corporation remains after the transfer of assets, and both corporations share an identity of stock, shareholders, and directors.

For example, if Corporation A sells all of its assets to Corporation B and then dissolves, but Corporation B continues to operate the same business with the same shareholders and directors, then Corporation B can be held liable for any legal claims against Corporation A.

This doctrine is based on the idea that the successor corporation is essentially a continuation of the predecessor corporation, and therefore should be held responsible for its actions.