Multinational Companies For Its Subsidiaries' Debt Responsibility

With the economic globalization and development of China, more and more investors consider China as the heavens for investment, which have offered us great opportunities but brought us a series of problems as well. During the business operation of transnational corporation, parent company schemes the operational plan for entire transnational groups so as to ensure its global strategy and interests of entire groups, which may lead parent company to confer an unfair advantage on itself and evade its legal liability through the infringement of the interests of its subsidiaries.The essay emphasizes on the analysis about parent company's debt liability to its subsidiaries in transnational corporation, makes a profound discussion about the relationship between parent company and its subsidiaries, relative theories , the legislation and judicial practice of common law legal system and continental legal system and proposes recommendations for Chinese legislation in the end.There are four parts in the essay. The first part examines the definition and structure of transnational parent and subsidiary company and then derives debt liability problems of parent company to its subsidiary in transnational corporation on account of parent company's domination.The second part examines the relative theories about the debt liability of parent company to its subsidiaries in transnational corporation. The theories are limited liability theory, whole liability theory, disregard of corporate personality theory and subordination theory.The third part examines the legislation and judicial practice of common law legal system and continental legal system.The fourth part examines the relative legislation of China especially the corporation law revised in 2005 and proposes some recommendations for relative deficiencies in Chinese legislation.