Limiting ‘limited liability’

Abstract

Since this paper falls within the scope of the liability of corporate group, its main legislative and doctrinal references will be drawn from corporate group law. The application of traditional corporate law and doctrine on modern corporate groups is considered as the crucial cause of the gap between the law and reality. The present corporate law systems and its basic principles are not able to fulfil their role in today’s business world. In recent years, some countries have made gradual improvements in this field, however, there has been still no consistent and theory-based reform to corporate group law. There is a need to review and introduce main approaches and principles developed up to today. Without reaching out the fundamental limited liability paradigm there continuously would be ineffective efforts among academics and legislatures.

Introduction

One of the key factors that contributed to the expansion and development of economic and business relationships alongside modern industrial, technical and scientific development is the establishment of a business corporation as a channel to participate business relationship. There is no doubt that corporate groups have been shaping the world’s economy these days. Nowadays corporate groups (most of them are multinational corporations) are much more powerful than most countries; their employees outnumbering the labour force and revenue surpassing Gross Domestic Product of an entire country. Those large corporates are designated by their subsidiaries. For example, the fifty largest UK companies have, on average, 230 subsidiaries, sub-sub-subsidiaries, and so on¹.

However, the original legal theories, doctrines, principles of corporate law are outdated over the realities of this modern business development, so it is necessary to review them and seek new theories and principles. In response to the issues, at first, determining what the core cause of this legal backwardness is crucial.

This paper aims to reflect on the general international legal approaches to the liability of corporate group and the key theoretical principles recommended by commentators in some legally and economically powerful jurisdictions, from a comparative law perspective. We will review current doctrinal trends with examples from prominent jurisdictions including German, the EU, the UK, the U.S., etc. We need simply note that the exigencies of commercial activity and corporations present practical problems that are roughly similar in market economies throughout the world.

Corporate groups law is interrelated with other areas of law such as labour, insolvency, tort and so on but the scope of this paper falls within the only limited liability of corporate groups law through exploring doctrinal references and legal approaches. It could be said that corporate group law is one of the undertheorized areas. Being the most common and universal form of business organisation, the corporate group needs to draw more attention in national and international corporate law.

Limited liability

One of the core characteristics that define the business corporation is limited liability, which is derived from the nature of the corporate being a separate legal personality. The liability of a shareholder is restricted to the number of its shares, and that the corporate and its shareholders are not liable for the debts of each other. Some scholars note that this principle is “the most important discovery of the modern world, and more than the discovery of electricity, steam and light.”² The purpose of limited liability is protecting investors from business risks and has led corporate to become a major international and national economic stakeholder over the past decades. From a view of comparative law, a legal characteristic of corporation that is the most commonly shared in both common and civil law systems is “limited liability”. In England, the principle of limited liability was adopted by Salomon v Salomon Co (1897), which further became the standard of judicial precedent law, while the continental system was first described in the Napoleonic Code de Commerce³.

In the late nineteenth century, the acceptance of corporations as owners of shares in other corporations gave legal basis for group structures. At the beginning of corporation’s organisational development in the United States, the structure of corporate groups was restricted by claiming that obtaining shares of the other corporations would be more control oriented rather than investment. After embracing limited liability, over fifty years later, it became known as the most advantageous organisational form of business entity. Jose Antunes stated as⁴:

This change in the law literally opened up a new stage in enterprise organisation and structure. Enterprises, till then forced to keep their whole business within the strict boundaries of a sole corporation, began to expand through the creation or acquisition of other corporations where parts of their business were insulated and pooled together under a common strategy.

As it was a one person’s solo business Salomon v. Salomon Co obviously was not a case involving a group of corporations. That means the very first intention of limited liability which originated from the case was not for a collection of corporations.  Here we must bear in mind that at that time there was no assumption of the subsequent huge growth of multinational corporations and corporate groups⁵.

In regard to the corporate group, limited liability provides ‘double protection’ to the parent corporation, as this double limitation could provide hundredfold protection for a corporation with a hundred subsidiaries. In the context of justice, it is neither legally nor socially valuable one. Today’s multinational and group-based relationships of corporations have been becoming increasingly difficult to adjust by traditional corporate law rules.

Problem

Nowadays, there is a tension between the realities of commercial life and the applicable laws.⁶ During the origination of the classic principle of limited liability, corporations had been operating solely within a local context; hence this theory and principle are inadequate to regulate large corporations in the modern business world involving multinationals, groups, and conglomerates. One reason to believe that is considering the disparate relationship of one corporation’s ability to control the other peers as a natural person, much like a shareholder that is part of the parent organisation of the so-called ‘group’, as well as its involvement in business operations. Adherence to traditional limited liability led to ignorance of that even though the subsidiary corporation’s legal entity’s structure to be separate, behind that it is one single ownership, one control and one business. In the case of a group of corporates, it is criticized that legal and regulatory frameworks are lagging in its economic reality. In other words, the business profit comes to ‘the same pocket’ whereas the legal responsibility is divided into multiple parties. The issue of the corporate group law is a controversial subject which related to not solely one country, but a matter of concern for most countries.

The most urgent, common legal issues of corporate groups include obligations arising from tort, environmental hazard and public interests, fraudulent bankruptcy, protection of minority shareholders’ interests, and liability of the parent corporation. Without resolving the latter, it is impossible to solve the former effectively and comprehensively. The abovementioned issues of the corporations are a global challenge throughout the world.

Legal scholars considered that the issues of liability in corporate groups have been ‘one of the great unsolved problems of modern company law’, in the words of Jose Antunes:

“In a negative sense, it also explains why an entire phenomenology of modern corporate life-consisting essentially of the problems raised by corporate groups (the phenomenon of intercorporate control relationships between entities conceived of as autonomous and independent) –have traditionally been ignored, or at best marginally considered, in the context of this branch of law. To regulate a corporation as an autonomous and independent entity and, at the same time, to consider its status as a controlled and dependent one, seems, at first sight, a contradictory regulatory task, impossible to achieve in a single area of law. This probably is the reason why the founding fathers of corporation law regarded intercorporate control purely and simply as an unlawful phenomenon, with no possible place within its normative framework: as Kempin wrote in 1883, ‘it is obviously an anomaly that one corporation controls another corporation’. And that is the same reason why, however relevant the steps taken in the meantime to integrate such phenomena within corporate law, a leading European scholar could write precisely one hundred years later that it ‘cannot live without conflicts in the fold of classical company law’.” ⁷

Thus, the main reason for the lack of legal certainty of corporate group law is that most jurisdictions legalize corporate groups under general corporate law which focus on separate legal personality. These fundamental, long-standing concepts and inherent of corporate law have been making countries hesitation on corporate group law reform. The problem was identified by Harry Rajak as the following:

One thing, at least, is clear: the major industrial countries have identified enterprise groups as a threat on a number of fronts. At the same time, enterprise groups have been left to act with considerable freedom and flourish both within national boundaries and across borders, in the developed capitalist world and in developing countries. This conundrum is similar to, if not identical to, that which may be said to exist in relation to a single corporation and which arises from two fundamental concepts of corporate law: the independent legal personality of a corporation and the limited liability of shareholders.⁸

He continued on potential risks to avoid liability:

While it is most often the case that the members of the group are corporations in the legal sense—registered under the statute and enjoying the status of separate legal personality. In the world of private law, the entrepreneur can, for example, seek to use this facility to protect himself from liability, avoid tax, enjoy the benefits of employee status when such benefits are unavailable to an individual trader, and seek to avoid contractual obligations.⁹

These points advocated by Christian A. Witting who noted that ‘the powerful legal tradition of separate personality have been seized a tactical element of group planning on avoiding the liability in accordance with the law, and as such, there is no effective protection mechanism for protecting subsidiaries and their lenders. This is because of the ability of the parent company to structure relations between group companies in order to protect major assets from the reach of creditors. Limited liability is said to facilitate ‘risk-sharing’ between shareholders and the external parties with whom the company interacts. Within this area of the law, the fundamental concepts remain close to sacrosanct. Neither legislatures nor courts have been able to think around them with sufficient boldness’.¹⁰

Obviously, the first purpose of limited liability was to counteract and avoid business risks but ultimately it is used to do that from legal responsibility. In a nutshell, the group of corporations is a single economic unit from the view of economics, however, legally the group is considered as multiple legal units. Jose Antunes defines it as ‘the tension or contradiction between diversity (multiplicity of legal entities) and unity (unity of economic entity)’.¹¹ There is a legal loophole between these two notions. This legal improvidence raises a number of issues involving corporate groups.

As Peter Hommelhoff observed that ‘now that the economy has attuned itself to the applicable rules, there seem to be no practical legal problems as far as the private company corporate group by agreement is concerned, neither from the point of view of the existing parent companies, nor from the viewpoint of the minority shareholders’¹².

Pioneers in this field, Muscat and Blumberg, argued that the extension of limited liability from the ‘one-man company situation” evident in Salomon v A. Salomon Co Ltd ¹³ to control by a parent company was both accidental and unwitting. They contend that in order to foster investment, it was less necessary to confer limited liability on corporate shareholders, since individual shareholders in a parent company would be protected by limited liability. Muscat argues that “the absence of control justifies limited liability’, whereas the presence of corporate control will ensure that parent companies are not deterred from making investment in their subsidiaries.¹⁴

Although theorists agree that strict adherence to the accountability of corporate groups needs reconsideration, legal recognition of corporate group law has still been put down. The range of legal strategies, doctrines still offered to tackle those problems, notwithstanding references related to this subject are insufficient in the doctrine. It is needless to say that all legal systems face this problem since the basic corporate attributions are the same, at least at the doctrinal level, as abovementioned.

Principle and Doctrine

The European Union

A number of proposals and initiatives were made by the European Union for the purpose of improving the legal framework of the corporate group, but its initiatives were unsuccessful and left the development to member countries. Even though they pointed out the essential similarities in the fundamental challenges, it is likely that the discrepancy of approaches and principles of the corporate group laws in the Member States caused this failure. During the first attempt of the European Union’s corporate group law development¹⁵, it seemed to be based on Germany’s corporate group law since the country was and is the only exception, having a codified corporate group law.

Since this German principle has a tendency to criticized for being ineffective in the context of implementation, and subsequently, the following recommendations and drafts considered the doctrine of “Rozenblum” of France which recognizes group interest. Regarding the Rozenblum doctrine, directors of subsidiaries would not responsible if parent and subsidiary are closely linked to the structure and business, implementing the group’s unified policy, a balanced allocation of the corporates in the group, and the subsidiary does not provide for financial support beyond its capacity. 

Forum Europaeum Konzernrecht held in 1998 focused more on the Rozenblum Doctrine. In its report, in order to ‘legitimise in all Member States groups which are organized on a EU market-wide basis and thereby ensure that such groups as a whole and their subsidiaries operate on a firm legal basis’, a civil rule is proposed: ‘If the management of a group subsidiary operates its commercial policy in the interests of the group and consequently.¹⁶ Western European countries are mostly adhering the Rozenblum trend in case law. Although the EU proposals never became positive law, these initiatives attracted the interest of other countries. Jose Antunes argued their achievements as:

The EU legal system breaks new ground on the topic of intragroup liability. … it symbolizes, worldwide, the strongest reaction against the prevailing traditional ‘entity law approach” to the legal treatment of liability questions in parent-subsidiary relationships and provides the most far-reaching institutional effort advocating a revolutionary reality-adherent approach to the topic. The limited liability for parent corporations, issued from an approach backed up by the formal dogmas of the separate legal personality and the limited liability of the shareholders, should be replaced by the opposite rule of the unlimited liability of the parent issuing from an approach dominated by the reality of the group as a single economic unity or as a single enterprise  ¹⁷

The Forum Europaeum proposed that the regulation of corporate groups in Europe should have been based on the concept of ‘control’. The proposal was designed to provide for legal certainty and practicality and to be in harmony with the existing national laws of the Member States¹⁸. It must be noted that EU and Australian proposals made a noteworthy contribution to the academic debate and attracted attention somehow even though these documents could not lead to a holistic group regulation.

The United Kingdom

It is always influential throughout the world that the approach of the UK to the liability of corporate groups as the origin of the Salomon principle and one of the key players in the international business community. There are some statutory provisions to not to maintain the separate personality of corporate in certain situations, namely taxation, employment, insolvency and wrongful trading issues in the UK. Despite separate personality of a corporate is very ‘sacred cow’ in the UK¹⁹ some academics and judges have been aware of the unjustified doctrine in corporate groups’ world, with an attempt to apply ‘veil lifting’ jurisprudence. Veil lifting in the case law of the UK throughout history seems to have occasionally applied. In other words, English courts lift the corporate veil in very limited circumstances, in particular, the subsidiary is used for fraud.²⁰ This is why it was an unusual decision in the 1970s when the Court of Appeal was willing to pierce the corporate veil in DHN Food Distributors Ltd v Tower Hamlets London Borough Council²¹ in order to establish an “economic entity” for the purposes of compensating DHN for compensating the company for the disturbance caused by the compulsory purchase that involved the property legally belonging to one of its subsidiaries. Lord Denning, one of the sitting judges justified the lifting of the veil as following:

“We all know that in many respects a group of companies are treated together for the purpose of general accounts, balance sheet, and profit and loss account. They are treated as one concern. Professor Gower in Modern Company Law, 3rd ed. (1969), p. 216 says: ’there is evidence of a general tendency to ignore the separate legal entities of various companies within a group, and to look instead at the economic entity of the whole group.’ This is especially the case when a parent company owns all the shares of the subsidiaries — so much so that it can control every movement of the subsidiaries. These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says.”²²

It is ought to be noted, that lifting the corporate veil for corporate groups has not become the norm, as it was demonstrated by such cases as the Adams v Cape Industries Plc.²³

Alan Dignam analyzed this as ‘In some cases, they have upheld the principle and in others they did not’²⁴. The principle of veil lifting which denies the limited liability of the corporation has been introduced in the early years relatively, especially in the English-American legal system as judicial precedent. This principle is commented as ineffective. For example, Jose Antúneses concluded as veil lifting principle is a matter of uncertainty, unpredictable use, and where the borders of the jurisdiction of independence are legal. Therefore, it is also seen in the empirical study in some countries that the application of the method is ineffective, and the result is weak. For instance, in Australia between the years 1960 and 1998, 13 cases’ veil were lifted by the court²⁵. Also, Christian A.Witting opined that ‘failure of the common law is seen most explicitly in the doctrine of veil-piercing., …because courts have not properly determined the reasons for which this doctrine should be available independent of other common law actions. The first difficulty with veil-piercing involves the lack of consensus about what it is and about what it is supposed to achieve., …that veil-piercing is a doctrine which exists more in the minds of scholars than in actual legal practice’²⁶.

After all, there is an obvious inconsistency, there are not many cases that refer to the problem of applying the principle of veil-lifting. Uncertainty over criteria and standards of veil-lifting’s straightforward application causes the lack of recognizing situations where the separation of corporate personality, the Salomon principle can be ignored at all. Various endeavours have been taken and recommended for categorization of veil lifting application in the academic community, it is however, doubtful that legislature and judiciary regard the issue. This problem is similar to the Rozenblum doctrine as well, we would say.

Germany

The German Aktiengesetz was enacted almost four decades ago. Since it is the first ever systematic legal regulation of corporate groups, this statutory law raised extraordinary interest in many countries inside and outside Europe and gave way to the most vibrant doctrinal debate-which has been lasting even today²⁷. Germany’s ‘Konzernrecht’ is the exception worldwide and is therefore often taken as an example when any alternative and enterprise approaches to corporate groups are discussed.  Mostly, as a comparative tool for other jurisdictions, the set of rules relating de facto corporate groups are stated and referenced where a parent company exercises controlling power over its subsidiaries by agreement and the voting rights of the shares in the possession of the former.

The German system is criticized at the legal policy and its practical implementation. It too exclusively and too intensively focuses on corporate group existence protection and hence neglects the entrance protection²⁸ while meant to be implemented very strictly: every legal and factual act must be verified to determine whether it is disadvantageous²⁹. As Blumberg concluded ‘although the Konzernrecht is clearly the most extensive adoption of enterprise principles in Western world legal systems, with enormous influence over the evolving law of the EC, its immediate impact on German law is, in fact, somewhat confined’³⁰.

Hungary

The rules on corporate groups in the Hungarian Civil Code can be considered to be a legal transplant of the German “Konzernrecht” rules. It must be noted that contrary to German law, where the “Konzernrecht” rules are mainly applicable to stock corporations (Aktiengesellschaft) as dominant corporations, the Hungarian implementation of the rules allow for different sort of companies (limited liability companies, cooperative societies, and groupings). Recognized groups of corporations may be formed by at least one dominant corporation and minimum three controlled members. After registration, the members of the groups operate under a common business strategy, as outlined in the control agreement. One notable aspect of such arrangements is that the dominant member becomes liable for the losses incurred by the creditors of the controlled member that was liquidated. However, the dominant member may be relieved from the liability if it manages to prove that the controlled member’s insolvency did not arise from the common business strategy. This arrangement may provide a good solution for abuses of limited liability. Especially, when we consider how de-facto groups of corporations may be recognized by a court order upon the request of members. On the other hand, as Alexander Scheuch raised it concerning the German rules, it might become possible for shedding liability by terminating the control contract.³¹

Theoretical approaches

In comparative corporate group law, particularly in the context of liability, the legal principles and approaches of the group can generally be divided into three categories.

– “Entity approach” refers to a group of corporates as an independent entity. This is the conventional and fundamental principle is that each member corporate in a group structure is a separate legal entity entitled to separate legal rights and limited liabilities. This principle is based on the theory of traditional limited liability in corporate law and, in any case, the parent and subsidiary corporates assume no obligation or liability for each other. The principle remains dominant throughout the world, regardless of the legal systems. What the most concerning about the principle is that parent and other subsidiary corporations externalize the risk of liability through legally formed, separate, controlled units.

The structure of the modern group of corporates is a continuous chain of the first, second, third, and more parent and subsidiary corporates, which means in turn, also double, triple and more protections for a single entity. Christian A.Witting argued this situation as ‘…corporate groups formed with several layers of subsidiary to protect the ultimate, individual shareholders…’³². Dignum and Lowry supported else the view of point like that allowing corporate groups to benefit from limited liability ‘represents an enormous extension of the Salomon principle’, the appropriateness of which the judiciary should question’³³. The weakness of entity law principle is related to creating this superiority for holding corporates.

– “Enterprise approach”. Parent and subsidiary corporates are taken into account as one legal entity under a pooled responsibility; and leads into an innovative and dramatic non-conventional trend which is largely unregulated and unrecognized as far as its theoretical and practical issues are concerned. There is no ‘universally harmonized general’ principle that considers all corporates in a group to be regarded as one.

Although it could not be said as sufficient the EU’s initiatives in enterprise law encourages other countries somehow to look up the corporate group law in a whole new way; namely Italy, Latvia, New Zealand, and Portugal responded relatively well to this approach. However, when considering a group of participating corporations as a single entity, this principle has been applying only to a few limited areas within the legal framework even in the aforementioned countries’ jurisdictions. In other words, it should be noted that the enterprise law is not an applicable general principle to all legal sectors involving corporate group, merely gaining attention where the traditional theory where may be considered as ineffective. The most controversial issues of pursuing this principle are that the identification of the parent’s actual and potential controls, which has been separately reflected in different sectoral laws, and the absence of a legal definition of the basic elements of the law.

There is an example that shows regulating corporate group as one unit is not impossible. Taxation authority is more aware of a corporation’s group structure which needs to be differently treated by ignoring the separate personality. This consolidated accounting report allows them to control the group’s financial reality. It could be said that the most common and successfully applied area of enterprise principle is the financial accounting of corporate. In most countries, this kind of provision in accounting is recognized as a part of corporate law reform and harmonized worldwide. the arrangement of a financial statement with a parent corporation is common because the firm is a group of firms considering the profit as one point. In light of this consideration, the question raised is if corporate law can reflect the accounting area with enterprise principle why other remaining fields of corporate groups cannot be dealt like that.

Despite the reformative enterprise principle recommended by some, both the legislature and the courts have found it as difficult to adopt in the absence of clear legislative guidance. There were and are urgent needs of new corporate law and new corporate principles to respond to the challenge presented by corporate groups. Exploring enterprise liability over corporate group would indicate the way of adopting its basic principles in some selected scopes of modern corporate law. In general, there is a need to develop ‘enterprise’ theories and principles further in order to improve the coordination of group corporates. Because of the principle that the fundamental principles of the traditional corporate law are broken down, lawmakers and researchers have also been cautious and suggest alternative guidelines. Therefore, Petrin and Choudhury commented on the weakness of enterprise approach as ‘perhaps the biggest problem facing enterprise liability approaches is to find an appropriate definition of what constitutes the enterprise and, relatedly, which companies should be liable within the group or how such liability is to be allocated among them.’³⁴

– “Dualistic approach”. This approach was advocated by Jose Antunes³⁵ at the doctrinal level, and proposed intermediate strategy of the two different approaches discussed earlier. In terms of legislation, the strategy is based on the Germany’s corporate group law. This principle is based on the relationship between the parent and subsidiary and the degree to which the controls are de facto or the contractual control are in place and recommends the flexibility of implementing the appropriate strategy. The existing literature mostly recommends this approach so far.

Even though gradually paced, there are some movements done with considering that the legal theory of corporate has not changed adjusting the reality of the modern multinationals and remained with laws for the 19th century’s local, small corporations, and double limitations for corporate members, and offering some strategies for fairness. However, there is no systematic and complex theory and principle in the group’s law, and still in a dilemma.

Conclusion

The focus of this article is to summarize doctrines and principles on a corporate group’s liability and provide primary understanding in order to seek further resolutions to problems relating corporate groups. There are needs to be some reform of the law to acknowledge the reality of large corporate groups, especially with the potential for abuse. Exactly what form that will take is subject to debate as shown above. Limited liability is not a rule of natural law. If it is inconsistent with the root of law, fairness and justice, an adjustment must be considered. Yet corporate groups law’s problems are still unresolved, and the results achieved so far are still unsatisfactory and ineffective. It might be deemed that corporate groups’ legal concerns left in disarray because states are unable to control these main actors of the economic system. Without resolving the limited liability issue as a foundation at first, it is completely futile trying to settle other areas of corporate group law for a complex result. Developing dedicated legal doctrines to be effective in the sense that, absent such doctrines, the corporate group could not be regulated convincingly. In most jurisdictions, lawyers, researchers and law-makers only look at traditional legal issues over the corporate but are not paying enough attention to addressing the legal issues of modern corporates that are organized as a group. The fact that the group of corporates that was left behind in the legal framework of the corporate has begun to consider the relative importance of the 1990s since then, but theoretically it is still controversial and practically inapplicable.

The principle of separate corporate legal personality has been a cornerstone in the development of corporate law in common law countries, with investors being protected by the concept of limited liability. The evolution of the corporation as a vehicle for investment has been credited by some with underpinning modern economic development. The argument in favour of limited liability is stronger with its longstanding classical doctrine. There is hesitation like neglecting of the traditional legal protection of the corporate as its main feature will negatively affect the economy and the business sector. This is the reason behind this backwardness.

Even though criticized as being too radical, disseminating the enterprise approach would be most helpful in breaking traditional, fixed and predominant attitude. There is a tendency to regard the enterprise law approach relatively in some jurisdictions, but not responding with the complexity of the corporate legal regulatory framework to the phenomenon makes it difficult to apply the law. As previously stated, this principle can be seen in a few restricted areas, rather than completely disregarding the group’s limited liability. Nevertheless, we should consider at least the principle of denying limited liability in the field of liquidation, bankruptcy, and environmental damages of the highest legal entity. When introducing these theoretical principles into legislation, it is important to coordinate closely with the ‘real control’ of the parent and the business integrity of participants. Because internal communication, management and control of corporate groups are different, how the subsidiary corporation is dependent on the parent and whether the activities are carried out in a vertical management group, should be addressed. Christian A.Witting asserted that ‘theory aside, it is unsurprising that courts prefer to work with established legal concepts in the regulation of corporate groups, assigning especial importance to the concept of separate legal personality’.³⁶

Footnote

¹ Christian A.Witting, Liability of Corporate Groups and Networks 66 (Cambridge University Press, 2018).

² Jose.E.Antunes, Liability of Corporate Groups 64 (Kluwer Law and Taxation Publisher, 1994).

³ Phillip I.Blumberg, The Multinational Challenge to Corporation Law 19 (Oxford University Press, 1993).

⁴ Antunes 50 (n 2).

⁵ Alison Mccourt, A Comparative Study of the Doctrine of Corporate Groups with Special Emphasis on Insolvency, 5 (Oxford University, UK, June 24-26, 2007).

⁶ Paul Hughes, Competition law enforcement and corporate group liability –adjusting the veil, 2 E.C.L.R, 21 (2014).

⁷ Jose.E.Antunes, Liability of Corporate Groups 15 (Kluwer Law and Taxation Publisher, 1994).

⁸ Harry Rajak, Corporate Groups and Cross-Border Bankruptcy, 44 Texas International Law Journal, 524 (2009).

⁹ Ibid.

¹⁰ Christian A.Witting, Liability of Corporate Groups and Networks, 64,234 (Cambridge University Press, 2018).

¹¹ Jose.E.Antunes, Liability of Corporate Groups, 489 (Kluwer Law and Taxation Publisher, 1994).

¹² Peter Hommelhoff, Protection of Minority Shareholders, Investors and Creditors in Corporate Groups: the Strengths and Weaknesses of German Corporate Group Law 6 (Cambridge University Press, 2009).

¹³ Salomon v. A Salomon Ltd [1897] AC 22, HL

¹⁴ Paul Hughes, Competition law enforcement and corporate group liability –adjusting the veil, 2 E.C.L.R, 75 (2014).

¹⁵ Corporate Group Law for Europe: Forum Europaeum Corporate Group Law (2000)

¹⁶ E Koji Funatsu, Trends in European Corporate Group Law Systems and the Future of Japan’s Corporate Law System, 11 Public Policy Review, 477 (Policy Research Institute, Ministry of Finance, Japan 2015).

¹⁷ Jose.E.Antunes, Liability of Corporate Groups, 293 (Kluwer Law and Taxation Publisher, 1994).

¹⁸ Jukka Mähӧnen, The Pervasive Issue of Liability in Corporate Groups, 13 European Company Law, 4 (2016).

¹⁹ Harry Rajak, Corporate Groups and Cross-Border Bankruptcy, 44 Texas International Law Journal, 526 (2009).

²⁰ Paul Hughes, Competition law enforcement and corporate group liability –adjusting the veil, (E.C.L.R, 2014, Issue 2)

²¹ [1976] 1 WLR 852

²² DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852

²³ [1990] Ch 433

²⁴ Alan Dignam and John Lowry, Company Law, 34 (Oxford University Press, 2009).

²⁵ Ian Ramsay and Geof Stapledon, Corporate Groups in Australia, research report, 18 (The University of Melbourne, 1998).

²⁶ Christian A.Witting, Liability of Corporate Groups and Networks, 309 (Cambridge University Press, 2018).

²⁷ Jose Miguel Embid Irujo, Trends and Realities in the Law of Corporate Groups, 6 European Business Organisation Law Review, 66.

²⁸ Peter Hommelhoff, Protection of Minority Shareholders, Investors and Creditors in Corporate Groups: the Strengths and Weaknesses of German Corporate Group Law 8 (Cambridge University Press, 2009).

²⁹ Koji Funatsu, Trends in European Corporate Group Law Systems and the Future of Japan’s Corporate Law System, 11 Public Policy Review, 476 (Policy Research Institute, Ministry of Finance, Japan, July 2015).

³⁰ Blumberg Phillip.I.Blumberg, The Multinational Challenge to Corporation Law 162 (Oxford University Press, 1993).

³¹ Alexander Scheuch, Konzernrecht: An Overview of the German Regulation of Corporate Groups and Resulting Liability Issues, 13 European Company Law 191-198, 195 (2016).

³² Christian A.Witting, Liability of Corporate Groups and Networks, 173 (Cambridge University Press, 2018).

³³ Alan Dignam and John Lowry, Company Law, 49 (Oxford University Press, 2009).

³⁴ Martin Petrin and Barnali Choudhury, Group Company Liability, (European Business Organisation Law Review, 19, 2018), https://doi.org/10.1007/s40804-018-0121-7

³⁵ Jose.E.Antunes, Liability of Corporate Groups, (Kluwer Law and Taxation Publisher, 1994)

³⁶ Christian A.Witting, Liability of Corporate Groups and Networks 184 (Cambridge University Press, 2018).

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Bold, Urnaa
PhD Student, University of Pécs, Faculty of Law

Dr. Ferencz Barnabás
Assisstant Lecturer, University of Pécs, Faculty of Law, Department of Financial and Business Law

Dr. habil. Kecskés András
PhD, Associate Professor, University of Pécs, Faculty of Law, Department of Financial and Business Law