Legal consequences of affiliated enterprises

Legal analysis: From a purely theoretical point of view, there are only two ways for a holding company to control its subsidiaries: one is to manipulate their business decisions, and the other is to control their finances. In the first case, due to the manipulation of the holding company, the subordinate company loses or almost loses its right to operate independently, and its will is no longer independent. In the second case, the holding company generally treats the property of the subsidiary as its own property, and the property of the subsidiary is no longer independent, thus making the subsidiary lose its material basis for independent responsibility. In both cases, the holding company shall be jointly and severally liable for the debts of its subsidiaries.

Legal basis: Article 216th of the Company Law of People's Republic of China (PRC). The meanings of the following terms in this Law:

(1) Senior management refers to the manager, deputy manager, financial officer, secretary of the board of directors of a listed company and other personnel stipulated in the articles of association of the company.

(2) Controlling shareholders refer to shareholders whose capital contribution accounts for more than 50% of the total capital of a limited liability company or whose shares account for more than 50% of the total share capital of a joint stock limited company; Although the capital contribution or the proportion of shares held is less than 50%, but according to their capital contribution or shares held, shareholders have enough voting rights to the shareholders' meeting and the resolutions of the shareholders' meeting.

(3) "Actual controller" refers to a person who is not a shareholder of the company, but can actually control the company's behavior through investment relations, agreements or other arrangements.

(4) Relationship refers to the relationship between the controlling shareholder, actual controller, directors, supervisors and senior managers of the company and the enterprises directly or indirectly controlled by them, as well as other relationships that may lead to the transfer of the company's interests. However, state-controlled enterprises are not related only because they are controlled by the state.