Legal analysis: it is not illegal for parent-subsidiary companies to borrow funds. Inter-enterprise capital borrowing refers to the behavior that enterprises transfer their temporarily idle funds to other enterprises at a certain price in market economy activities. Corporate capital lending is a common way of short-term financing for enterprises. The "Enterprise Regulations" clearly stipulates that the judicial organs shall protect enterprises from borrowing funds from each other to meet the needs of production and operation. If financial institutions are the main business, this will inevitably seriously disrupt the financial order and cause confusion in financial supervision. Therefore, other circumstances in which inter-enterprise lending should be deemed invalid are specially stipulated.
Legal basis: Article 11 of the Law of People's Republic of China (PRC) on Private Lending, the people's court shall support the private lending contracts concluded between legal persons, other organizations and between them due to the needs of production and operation, except in the circumstances stipulated in Articles 52 and 14 of these Provisions, if the parties claim that the private lending contracts are valid.