Is the company's guarantee for its subsidiaries good or bad?

Legal analysis: the object of guarantee is the subsidiary, and the parent company has absolute control over it. The parent company knows its operating conditions very well, so accordingly, the financial risks are within the controllable range. Based on this control relationship, the guarantee of the parent company will not harm the interests of the company and shareholders. The guarantee behavior of the parent company has injected financial support and motivation into the operation and development of the subsidiary company and safeguarded the interests of all shareholders, so it is generally beneficial.

Legal basis: Civil Code of People's Republic of China (PRC).

Article 61 In accordance with the law or the articles of association of a legal person, the person in charge of civil activities on behalf of the legal person is the legal representative of the legal person.

The legal consequences of the legal representative's civil activities in the name of a legal person shall be borne by the legal person.

The restriction of the legal representative's representation by the articles of association or the functions and powers of the legal person shall not be against the bona fide counterpart.

Article 504 A contract concluded by the legal representative of a legal person or the person in charge of an unincorporated organization exceeds its authority, unless the other party knows or should know that it has exceeded its authority, the representative's behavior is valid, and the contract concluded is valid for the legal person or unincorporated organization.