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The Parent Company’s Liability for its Foreign Subsidiary
Haitao Zhang, Director Legal , CNPC America Ltd., Canada
The limited liability has been the foundation of the corporate legal framework since the establishment of the corporate legal concept, and the parent company and its subsidiary are separate entities, so the parent company should not be liable for any debt or liability that the subsidiary incurred. However in reality, there were some cases that the parent companies abused their capacity and manipulated the subsidiaries as their tubes or tools to siphon the profits and avoid any liabilities. To prevent the abusive practices done by parent companies, the courts and/or legislatures in different jurisdictions have developed multiple doctrines to address these issues, such as ’Pierce corporate veil
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