Alter Ego Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Alter Ego, written in plain English, along with examples of how it is used.

What is Alter Ego?

adj. the term is used for transactions, pricing or deals agreed upon by wo such parties, in a manner that does not take into consideration any kind of relation the two parties might share say for example, previous financial agreements, blood relation, etc. The dealing is without any affiliation towards each other and is strictly as business deal, it is called arm’s length transaction. for example, agreements between two relatives might be loose on some points and give one party some unfair advantage, of course with the knowledge of other party; but such a business is said to be not an arm’s length transaction. This comes from the phrase “to keep at an arm’s length” which means to maintain sufficient distance from someone so as to to exclude any intimacy or feelings towards the other person/party. The main implication of not having an arm’s length deal could be additional taxes by the taxation authorities if they find an unfair business being conducted at a lower price thereby resulting in loss in state’s tax collection. Also such dealings are common in government’s affairs with other bodies, such as the judiciary, the press, public bodies, private sector, etc. so as to give the later their freedom of operation.