Is a corporation liable for its subsidiaries?

The old saw that parents are liable for their children is not entirely accurate from a legal perspective. As is so often the case in law, the reality is: it depends. Parent corporations are subject to a special set of rules.

A corporate group may comprise multiple subsidiaries linked to a parent company. Although the parent company and its subsidiaries share financial interests, they are generally considered to be separate legal entities, each with distinct liabilities and responsibilities.

In recent years, there has been a growing trend towards holding parent corporations liable for the actions of their subsidiaries. This shift has been driven by legislative acts and court decisions, which have imposed liability on parent corporations for a range of issues, including anticompetitive behaviour, workplace safety violations, and environmental damage. The subsidiaries in question often operate in a different country than the parent company.

My research explores the underlying principles and boundaries of the parent company’s liability in these cases.

Holger Fleischer is a director at the Institute.
He studies company law and
capital markets law, among other things.
More on Holger Fleischer and his research can be found here.