Financial Holding Company To Increase The Liability System

As a pattern of mixed operation in financial industry, financial holding companies have both financial and holding character which make the legal and economic relations between the holding company and its' subsidiaries very complex. As a conceptual matter, enhanced obligations of financial holding companies can be understood as a departure from the traditional rule of limited liability—under which parent corporations are not responsible for the liabilities of their subsidiaries. Through a series of discrete regulatory initiatives, US government agencies and legislatures have imposed a host of new legal obligations on financial holding companies as a regime of unlimited liability for the special case of holding companies that control subsidiaries in the financial industry. Recently financial holding companies mushroomed in china, so the Chinese regulatory system needs to set up the doctrine of enhanced obligations according to western experiments.This thesis falls into three parts except introduction and conclusion: The first part will introduce the concept of financial holding companies and analyze its' characteristics firstly, and then propose the conception of the system of enhancing obligations of financial holding companies to point out its' substance. As the doctrine of "expanding obligations" is quite similar with the famous doctrine of "piercing the corporate veil", the author will make a complete compare between them. Lastly, the author will survey the relation between enhanced obligations and financial holding companies and point out the regime of enhanced obligations special to financial holding companies. The second part will firstly analyze the specific condition of this system's emergence in America, and then introduce the justifications, the practice and relevant measures and statutes of enhancing obligations of financial holding companies in America. Finally, analyze the case of AIG in the Subprime Mortgage Crisis under the system of enhancing obligations. The last part will focus on the reality of Chinese financial holding companies and found out that due to the specific history of their development and the current situations in China, Chinese financial holding companies have their own peculiar natures. However, the "enhanced obligations" doctrine is of the same value in China, although the doctrine needs some amendments to be adjusted to the situations of Chinese financial holding companies.