Responsibility of the Holding Company for the Debts and Obligations of the Subsidiary Company

Abstract

One of the very important topics concerning the relationships between holding companies and subsidiary companies is the issue of the holding company’s responsibility regarding its subsidiaries. Given the independent legal personality, the question arises: Does the holding company have any responsibility for the actions and obligations of its subsidiary companies? The answer to this question may vary across different legal systems. In this article, an attempt has been made to answer this question by examining the legal systems of several countries and analyzing the relevant legal provisions in Iranian law. Ultimately, after thorough examination, it has been concluded that despite the independent legal personality of legal entities and the fact that in some legal systems, holding companies have been held responsible for their subsidiaries, in Iranian law, due to the lack of explicit legal texts on this matter and the emphasis on the independence of the legal personality of entities, it can be argued that holding companies are only responsible to the extent of a company and shareholder for the actions of the subsidiary.