This is a poignant question in the light of the wave of recent administrations and liquidations on the High Street.
The general position is that a holding company is only liable to pay any amount not paid up on its shares in the subsidiary company. However, there are some situations where a holding company or its directors may be held liable upon the insolvency of a subsidiary. Some examples are:
- Where there is a contractual liability, such as a guarantee or an indemnity.
- Where a subsidiary is merely acting as its holding companys agent in dealing with a third party.
- Where a person or company is under an existing legal obligation or liability, or subject to an existing legal restriction, which he/she/it deliberately frustrates by int…
Read the full article at: https://www.financialdirector.co.uk/2018/08/16/liability-of-a-holding-company-for-an-insolvent-subsidiary/