A Study On Parent's Liability For Subsiadry--A Comparative Perspective

The past century has seen the dramatic increase in the number and scale of the company groups all across the world. In the early days of the company history, the investment of the company is forbidden by the law, thus the shareholders were completely blood-and-flesh persons. But the company's share-holding of other ones has become popular since it was passed by some states of the United States of America in late 19th century. The company group, which consists of parent and subsidiaries, enjoy advantages ranging from lower costs, easier and quicker information sharing to higher efficiency. However, the company group based on parent and subsidiaries is also just like a double-edged sword. Some new problems are inevitably incurred despite its great contribution to the economic system, such as the interests of minority shareholders of the subsidiaries may be infringed and threatened by the misdoing of the parent (the majority shareholder), on which this essay will not concentrate. The author is trying to present some advice to the amendment of the Company Law of China to govern the liability of parent for subsidiaries considering the legislation and practice of the common law countries and civil law countries. And the emphasis is put on the legal protection of the creditors of the subsidiaries.The dissertation consists of three chapters.In the 1st chapter, the author analyses the evolution of the problem, presents the significance of the study and gives clear definition of some nuclear concepts, such as company group, parent and subsidiary.In the first section of the second chapter, the author introduces the theory of "piercing the corporate veil", which is developed in the United States of America and other common law countries. The law professors and senior judges have developed agent theory, instrument theory and enterprise theory based on years of quarrel and debate. And, in the following three sections of this chapter, the author introduces the equivalent legislatures and practice of Germany, France and Taiwan (China). In the fifth section is the comparative work of the above discussed theories and legislatures. Then the last section, the author conduct a review on the theory and law of limited liability of shareholders after observation and pondering of the history of the company history. The two standards, the separate mind and the separate property are both the key roles in determining whether the subsidiaries have the separate legal entity.In the third chapter, the author describes the current situation of China's legislature and justice and gives advice on how to amend the currently-existing laws to govern the changed the structure of the company society.