Associated Enterprises In The Legal Protection Of The Slave Interests Of The Creditors Of The Company

As a sort of modern economic phenomena, affiliated enterprises are developing rapidly in china. Affiliated enterprises are challenging our local legal systems such as company law. Though the traditional company law have gave some methods such as obeying the company affairs to open principle and carrying out the company capital principle, these methods could not solve the problem of protecting the interests of oblige in affiliated enterprises completely. Under the protection of limited liability, controlling company control and dominate the business of the subsidiaries, and use them as tools for the whole group's business strategy and policies, immune from liabilities for injuries caused to the subsidiaries. Obviously, the subsidiary company oblige is facing huge risk in affiliated enterprises if we do not give them especially protection. Protecting obliges interest of subsidiary company is an important aspect in the course of legislation of affiliated enterprises.The text is established in the study of protection of subsidiaries obliges. After giving analysis of the course and situation of national law and foreign law, the article gained some primary legal suggests.Chapter 1. This part is the legal analysis of the definitions about affiliated enterprise. In order to study the issue of the paper, the text analyzed and provided several important definitions such as affiliated enterprises, control, and concluded four legal characters of affiliated enterprise consequently. After that, this chapter analyzed the causes which obliges can be damaged. Improper associated business, improper deal to outside, increasing capital illusively, improper surety and bankruptcy are the main causes to the loss the subsidiary oblige. Another is that the independent personality and finite obligation are the hnplements that can be used by the controlling company.Chapter 2. A study on the present practices of the countries in the world has shown that there are mainly two modes to impose legal liabilities on controlling companies for the debts of the subsidiaries. First, impose legal liability on controlling companies by piercing the corporate veil by courts, which is common to the United States and English experience. Second, establish control-subsidiary debt liability system through legislation, which is exemplary of German experience. This part also reference two principles, which is substantive consolidation doctrine and Deep-Rock doctrine. Then the impact of these principles in the affiliated enterprises will be forward.Chapter 3. This part analyzed the weakness of our legal system and tried to find ways to establish or improve the system of protecting the interests of obliges in affiliated enterprises suitable to Chinese culture and reality. The laws and regulations of China have till now failed to respond to this issue and Chinese laws are cut out only for single company entity. The courts, with no laws to resort to, have been helpless in particular control-subsidiary liability cases and failed to provide remedies to the creditors for the injuries suffered by them. The suggestions of legislation about the issue of obliges protection are the chief part in this paper.