Legal responsibility of the holding company About its subsidiaries

The beginning of the second half of the twentieth century witnessed the beginning of a new stage in the development of the global economy, as this stage was marked by the emergence of the so-called international production. The factors affecting the production process are no longer confined within a single country, but rather have extensions outside the borders of the state. Indeed, the concept of the global economy has become a substitute for the concept of the national economy, after the principle of freedom of trade and industry prevailed, despite the existence of some exceptions, but these exceptions do not make trade and industry a privilege or a monopoly of the state only, but rather countries have been racing to provide guarantees for companies and institutions that She invests in her country to develop her economy. In these circumstances, the so-called corporate group system appeared, where empowering the legal person to own shares and shares, such as individuals in other companies and managing them accordingly, has a major impact on the establishment of giant companies, which consist of a company called the parent company that contributes to other companies called The nascent or subsidiary companies are subject to it, where the parent company owns a percentage of the capital of the company or nascent companies in a way that achieves control over this company or companies, despite the independence of each company legally from the parent company, that is, there is an economic unit for the group, if the parent company is a member Dominant in the board of directors of the subsidiary company or the owner of the majority of its capital, it has full control over the nascent company, so that the parent company can direct the subsidiary to serve its interests, and in return the parent company becomes responsible for the debts of the company or subsidiaries, and bear the consequences of its bankruptcy. This phenomenon has emerged on the domestic and international levels. On the internal level, it is called the holding company, and at the international level, it has been called several names, including the multinational company, or multi-nationalities, or companies that cross national borders.