The relevance of limiting limited liability with a special focus on corporate group behaviour

Abstract

This dissertation will consider different perspectives to the traditional principles of separate legal personality and limited liability. The central question considers the absoluteness of separate legal personality against the liability of a parent company in view of its subsidiaries, made possible through a legal understanding of corporate groups as a single entity. The starting point is that corporate groups are the main corporate form used. The argument is that owing to the open texture of the law, there are gaps around the legal norms applicable to corporate groups since the same are not group-specific. Therefore, new legal norms are desirable. The motivation is the protection of direct and indirect creditors as well as minority shareholders. It is deemed relevant that persons unprepared to submit to the responsibilities of operating through group companies are held accountable. This is necessary so that the trust on which all business is founded is given real representation beyond lip-service. Where a group behaves as a single entity, and encourages its creditors to treat it as such, it is deemed rational that this should translate itself in terms of liability. The upholding of parent liability and the single economic entity doctrine in diverse jurisdictions and legal areas come together in an interdisciplinary fusion concluding that a principled approach to parent liability is both relevant and necessary.