Study Of Parent Companies And Subsidiaries Legal Issues

The course from beginning reform to implementing modern corporation system demonstrates that we have great achievements in corporation reform. Though the procedures are hard, we stand a chance of the future. When it comes to 21 century, facing the fact that economic tendency globalizes the whole world, we realize profoundly the emergency and difficulties of establishing and developing modern corporation system. Drastic competition requires that we reform, develop and innovate our old national corporations into under modem corporation system. For the sake of meeting international cooperation and competition brought under China's entering into WTO, we should transform the single corporations which are of narrow scope, weak competence and backward technology into macro-corporation groups which main models are parent-subsidiary companies and which bond is capital attachment.The establishment of macro-corporation groups of parent-subsidiary companies demands that we comprehend theories profoundly to direct practice, In China, parent-subsidiary companies are a novelty introduced from abroad, so the course of acquainting them completely needs a span of time. Nowadays, we have a variety of theories of parent-subsidiary companies and there is no unanimous concept These differences show the futures of Chinese law of succession and transplantation. The differences of scholars' attitude towards theories of successful corporation law influence the views they hold. On pursuing the original theories and analyzing different points, I expound my standpoint of parents companies: parent-subsidiary companies is a type of corporation established on the basis of shares controlling and contracts by independent legal persons. The parent companies control the other's share or capital or business; on the other side, subsidiaries are controlled. We can know that parent-subsidiary companies touch upon two or more legal subjects, each of which is independent by law and dependent in business and management.Parent-subsidiary companies comply with the development of productive forces and reflect great economic and legal value, so policymakers and investors think highly of them in market economy. By analyze parent-subsidiary companies economically, we know that they are "economic persons" who pursue the most economic effect of themselves, and that they can satisfy others' demands when contacting with other economic subjects. Generally, parent-subsidiary companies, whose essence is seeking profits, incarnate a certain economicrelationship and are the unity of purpose and means. Their legal nature is the unity of rights and obligations regulated by law and they are legally fictional persons, from the point of law of corporation institution confirming their subject qualifications and status legally and law of conduction rule regulating their actions.It's true that every thing has two sides. Though parent-subsidiary companies have great value in economic development, as a new thing, they have many defects and bring a series of challenges into modem law and legal implementation. These challenges concern the whole project of law. I will just study following problems of corporation law resulted from parent-subsidiary companies: a) infringement upon profits of creditors in subsidiaries; b) infringement upon profits of subsidiaries and its stockholders with less shares; c) subsidiaries holding shares of parent companies. For the purpose of perfection, I will discuss roughly related problems about tax law and antitrust law and give measures to solve these problems.I will attach importance to how Corporation Law regulates parent-subsidiary companies in part four. We should confirm the limited liability between parents and subsidiaries in Corporation Law. Confirming limited liability of parents doesn't mean that they can abuse the power of controlling. The direct duties of parents to subsidiaries are mainly protecting creditors of subsidiaries, regulating stockholders' obligation of good faith, and establishing judicial proceeding for sto...