The Liability of a Mother Company Towards its Subsidiary (A Comparative Study between the French, Belgian and Iranian Legal Systems)

Document Type : Research Paper

Author

Assistant Professor at Shiraz University, Faculty of Law and Political Science, Shiraz,Iran

Abstract

Groups of companies, which are new phenomena of the modern commercial life, have been welcomed in the recent years especially for their multiple benefits. The relationship between the companies inside the group, sometimes leads to the creation of subordinate relationship between these companies.  One of the both companies is called parent company and the other is subsidiary company. Due to the independence of the legal personality of each of the companies in this group, the principle is that each of these companies is accountable for their actions and is not considered responsible for the acts of another company. With regard to this rule, the question is that if the subsidiary causes damage to the others, can the parent company be held responsible? By applying multiple bases, particularly vicarious liability, the French and Belgian legal systems assume that this liability exists. However, in the Iranian legal system, due to the lack of laws, regulations and the principle of separation of legal personality, accepting this responsibility is not an easy decision. Nevertheless, by resort to some rules and by realization of certain conditions, the parent company can be considered responsible for its subsidiaries.

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References

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Comparative Law Review
Volume 8, Issue 1
Spring & Summer
April 2017
Pages 151-177

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