Protection On The Creditors Of Subsidiary Company

Nowadays, the existence of affiliated enterprises has become a widespread economic structure recognized and encouraged by all the countries and regions. Most of the companies which have some influences are affiliated enterprises. Affiliated enterprises are composed of several enterprises that are independent, but in unification in a certain extent. Such a kind of complex and indistinct relationship determines the limitation of solving the problems of affiliated enterprises and limitation of protection on subsidiary companies, both of which influence the realization of the interests of subsidiary company's creditors indirectly. So solving the problem of protection on subsidiary company'creditors is the common topic that the world countries and regions face. Our country in this aspect of lawmaking exists a great deal of shortage, so we have a necessity to carry on a more thorough study on it.This text is totally divided into 4:Chapter 1: Legal analysis of affiliated enterprises and relevant conceptsThe legal problems that the affiliated enterprises involved are numerous, concretely including the formation method, finance problem, tax problem and the problem of protection on minor shareholders and creditors etc. But no matter what we research on the problems completely or on some aspects, the concept of affiliated enterprises should be the point of departure that we study. The writer defined relevant definitions of affiliated enterprises, holding company and subsidiary company through analyzing the law makings of other countries and regions, and discussed the relationship between the holding company and subsidiary company farther. Although the definition of relevant countries and regions are different, and there is no unified standard in practice, but there is a unanimousness, that is, controlling and under controlling relationship. There are three characters to define such relationship: Firstly, the holding company controls the subsidiary company's power organ. Secondly, the holding company controls the subsidiary company's main work activities. Thirdly, the control is designed and continuous, not temporary or occasional. Our country's new company law prescribed the concept of controlling shareholder in affiliated relations for the first time. What the company law set has significant sense after the relevant department regulations and local legislations.Chapter 2: Practical and theoretic foundation on protection of subsidiary company'creditorsAfter having a certain understanding to the relevant and basic concepts of the affiliated enterprises, we will naturally discover that the benefits of subsidiary company's creditors are subject to be threatened easily according to the characteristics of affiliated enterprises themselves. Moreover, the rules and regulations that conduct the transactions between affiliated enterprises are not perfect enough which make the protection more difficult. The abuse of power of control is the normal condition in practice. The holding company makes use of funds fluxion between enterprises to manipulate trade price for carrying out a group profits or even a property transfer, or mixes its own properties to its subsidiary company account ,handling them like its own, or arranges interest-free or low loans for other subsidiary companies and holding company inside the group, compensates debt for them, and even establishes"empty hull company"for raising a loan in great quantities toward the bank or trading with the third people, when the creditors come for compensation, the subsidiary company has nothing. Above-mentioned facts are all the embodiment that the holding company abuses its power of control making the subsidiary company's funds lost and thereby harm the creditor's benefits. Of course, the threat faced by creditors is far more than these, the subsidiary company lacking of capitals, producing the subsidiary company by"the maternal crack"and trading with the third people in name of enterprises group all jeopardize the creditors'benefits. Above-mentioned risk and menace make up of our practical foundation on creditor's protection. The protection has its deep theoretic foundation, too. Under the circumstance of affiliated enterprises, because of the existence of controlling relationship, the limited liability and personality independence system designed for single enterprise originally can't develop efficiently, traditional benefit equilibrium system between shareholder and creditors also become very weak .Therefore, in order to build up new benefits equilibrium system, carrying out the law's value of fairness and justice, we should give special protection to subsidiary company'creditors.Chapter 3: Present legal condition of the protection of subsidiary company'creditorsThis chapter firstly analyzed the typical nations'lawmaking mode on protection of subsidiary company'creditors, that are, the mode of independent substantial law in Common Law, the mode of enterprises group law in Germany, the concept of"fact director"in France and the lawmaking of relevant enterprises in Taiwan, and then commented and analyzed the institutions of"piercing the corporate veil","the deep rock doctrine"and"combination inbeing doctrine"in the history of Common Law and distinguished the definitions of Contract Konzern and Fact Konzern in Germany. The writer carried on detailed treatise to each system, pointing out every institution's condition of applying, occasion of applying and the problems we should pay attention to in practice, and meanwhile pointing out their advantages and shortage. I hope there is some use for reference to our relevant lawmaking.Chapter 4: Present condition analysis and system speculation of the protection on subsidiary company'creditors in our countryThis chapter firstly analyzed our country's company law, stock law, bankrupt law and relevant local regulations on the aspect of the protection of subsidiary company'creditors and then pointed out the shortage of its existence. The shortages included four aspects, which were, lacking systematization on affiliated enterprises'lawmaking, regulating the key concepts indistinctly, protecting measures incomprehensively and lacking relevant matching institutions. Aiming at these shortages, synthesizing the flourishing nations'advanced lawmaking mentioned above, the writer considered that the special regulations and protections should be given to the subsidiary company'creditors in the company law, stock law, bankrupt law, law of civil procedures etc. Of course the main institutions should be designed in the company law in which the subsidiary company'creditors should be given pre-protection, mid-protection and post-protection comprehensively for realizing the equilibrium system of relevant people'interests.