In China, most subsidiaries are established through joint ventures or mergers and acquisitions. A subsidiary cannot apply for the same company name as the parent company, but a subsidiary can. Both have their advantages and disadvantages. The establishment and management of branches are easy, but the risks and responsibilities of any problems are borne by the head office. Setting up a subsidiary requires less investment, but it is difficult to manage. This requires strict control of subsidiaries. The parent company's control over its subsidiaries includes personnel control, financial control, audit control, performance evaluation control and capital control.
Personnel control means that the parent company has the right to decide the financial personnel of the subsidiary, and the financial information of the subsidiary is fed back to the parent company in time through the financial personnel, so as to realize the whole process supervision of the financial activities of the subsidiary before, during and after the event. Financial control should adhere to people-oriented and use good people. The ancients said, "invincible." Who to recruit and who to use in what position is an extremely important issue. According to the different ways in which the parent company controls the financial personnel of its subsidiaries, personnel control can be divided into two types:
1, direct commission system. In this way, the parent company uniformly appoints the financial personnel of the subordinate companies, and the labor and personnel relations of the financial personnel are directly managed by the parent company.
The advantage of this method is that the vital interests of financial personnel depend on the parent company, which can avoid the damage to the overall interests of the group caused by the control of others; The parent company has the right to decide the deployment and post rotation of financial personnel, which is conducive to the optimal allocation of human resources and can avoid some group tacit understanding that is not conducive to the long-term work of financial personnel; The unification of selection criteria is conducive to the improvement of the overall quality of financial personnel. Its disadvantage is that financial personnel seem to be separated from subsidiaries. Because of different interests, it is easy to coordinate between financial personnel and operators, which affects the efficiency of enterprises and is not conducive to the overall development of the group. When a subsidiary has problems, the operator may use this as an excuse to shirk responsibility.
2. Qualification examination and approval system. The qualification examination and approval system is the qualification condition stipulated by the parent company for the employees of its subsidiaries. Subsidiaries choose their own financial personnel and report them to the parent company for approval. The reported personnel must meet the qualification requirements of the parent company for financial personnel, and the parent company determines whether they can take up their posts according to the qualifications and actual business level of the reported personnel.
The advantage of this method is that subsidiaries can choose the required financial personnel according to the actual situation of enterprises, which is conducive to the coordination between financial personnel and operators; The qualification examination system can guarantee the basic quality of the selected financial personnel; The parent company has a deterrent effect on the final audit of financial personnel qualifications. Its disadvantage is that the control over subsidiaries is not as strong as the direct appointment system; Because the company recommends its own financial personnel, it is easy to produce cronyism; The interests of financial personnel are not independent of subsidiaries and are easily controlled by others.
At present, in order to ensure the control right and give full play to the accounting supervision function, domestic group enterprises generally adopt the direct appointment system. At present, enterprises basically set up subsidiaries through joint ventures and acquisitions, which makes the relationship between the operators of subsidiaries and the financial personnel appointed by the parent company very complicated. How to improve the quality of appointed financial personnel and coordinate the relationship between subsidiary operators and financial personnel has become the key to the direct appointment system. Regular training and experience exchange for foreign financial personnel can play a very good role. In short, in personnel control, we should first advocate high standards and strict requirements, that is, financial personnel should have high ideological and moral character, high sense of political responsibility, high sense of professionalism and work responsibility, and skilled business skills. Secondly, in personnel management, the introduction of competition mechanism.
Second, system control.
System control means that the parent company formulates a series of financial rules and regulations, which require the subsidiaries to strictly implement, so as to control the financial activities of the subsidiaries. System control should first be based on national laws and regulations, accounting law and enterprise accounting standards, and under the supervision of the parent company, combined with the actual situation of each subsidiary, formulate specific, practical and concrete internal financial systems that conform to the industry characteristics of each subsidiary and belong to the whole group.
Clear provisions should be made on some important aspects that are easy to cause losses and asset loss, such as the examination and approval of foreign investment; Restrictions on the guarantee of foreign units; Approve the purchase of large assets; Constraints on the borrowing of subsidiaries and so on. At the same time, the parent company should urge its subsidiaries to formulate their own specific internal financial systems according to the actual situation, which should belong to the overall financial system of the group. Financial control system mainly includes the following three aspects: 1. Post separation system 2. Examination and approval authority control system. Accounting system control system.
The advantage of system control is that it can ensure the internal financial operation of subsidiaries to follow rules, control first and then engage in it, and prevent the financial activities of subsidiaries from getting out of control from the root. The disadvantage is that the effectiveness of this method is affected by the strength of the subsidiary's implementation of the financial system. Once the subsidiary intentionally conceals or does not implement it, all kinds of systems will just become a dead letter. Therefore, the parent company should always check the implementation of the financial system by its subsidiaries to ensure the effectiveness of this method.
Three. Audit control
Audit control means that the parent company regularly or irregularly audits the financial activities of its subsidiaries, understands the financial status of the subsidiaries through the audit, and punishes the behaviors that do not conform to the financial system, thus achieving the purpose of financial control.
Due to the trend of their own interests, individual subsidiaries often use some methods that are not in line with the financial system to cover up irregular business activities and send whitewashed financial statements to the parent company, which will make the decision of the parent company based on wrong information. In order to obtain true and reliable financial information and standardize the financial activities of subsidiaries, it is necessary to conduct regular or irregular audits of subsidiaries. The audit of subsidiaries can be divided into external audit and internal audit. External audit is conducted by accounting firms, mainly to express opinions on the fairness, authenticity and consistency of subsidiary statements. Internal audit audits and evaluates the financial revenue and expenditure, business management activities and economic benefits of subsidiaries to find out their authenticity, accuracy, compliance and effectiveness. From the point of view of strengthening the financial control of subsidiaries, internal audit can play a more important role than external audit, because its auditors are group company personnel, know the subsidiaries better and have a wider audit scope. The executive subject of external audit is social intermediary organizations, which are independent and not easily influenced by interpersonal relationships. The combined application of the two audit methods can make the parent company strengthen the financial control of its subsidiaries more comprehensively and effectively.
The advantage of audit lies in its authority and reliability. It is the most direct and effective way to investigate and find specific problems, and it has a certain deterrent effect on subsidiaries. The disadvantage is that audit control belongs to post supervision in most cases. Non-compliance often occurs when problems are investigated through auditing. Although the parties concerned should be punished, the losses caused are often irreparable. Excessive audit activities will also interfere with the normal and orderly operation and financial activities of subsidiaries.
Strengthening audit supervision is still the key to financial control and an important means to prevent minor delays and make up for them. From "Enron" to "WorldCom", the harm caused by audit mistakes is social. Comrade Zhu Rongji put forward "Don't make false accounts" at two accounting meetings, which sounded the alarm for accounting and auditing.
Fourth, performance evaluation control.
Performance evaluation control means that the parent company establishes an effective performance evaluation system, measures the performance of its subsidiaries on this basis, and takes reward and punishment measures according to the measurement results to strengthen financial control of its subsidiaries.
In the market economy, the parent company and its subsidiaries can have various goals, such as expanding market share and improving brand awareness, but the ultimate goal is to maximize shareholders' wealth. Therefore, the requirements of the parent company for the financial activities of its subsidiaries are not only true and legal, but also require them to reflect the results of the subsidiary's business activities, such as whether the capital is safe and complete and whether there is a reasonable return on investment. Whether these requirements are realized is more or less reflected in a series of financial indicators. The parent company should establish a set of performance evaluation system based on financial indicators, mainly including liquidity indicators, solvency indicators, profitability indicators and so on. According to the different situation of each company, some auxiliary indicators of quantitative analysis and qualitative analysis can be added, and the standard values of these indicators can be selected as the basis for measurement. By comparing with the standard value, the parent company can objectively grasp the performance and shortcomings of the subsidiary's business activities, and have a more objective evaluation of the subsidiary's financial situation, operating results and future earnings. The parent company can also adjust the types and standard values of financial indicators in time according to the changes in the external environment, making the performance evaluation system more objective and standardized.
The advantage of this method is the standardization of measurement basis, which is conducive to the institutionalization of financial control. It can not only reflect the financial situation of the subsidiary, but also promote the subsidiary to complete the tasks assigned by the parent company and realize the overall goal of the group company. Its disadvantage is that it is not easy to establish an objective performance evaluation system, and the parent company needs to constantly improve the evaluation method and specific operation degree. Abnormal changes in financial indicators caused by unexpected events beyond the control of subsidiaries lack flexibility; It is easy to induce the operators and financial personnel of subsidiaries to cheat in order to achieve certain financial indicators, such as cost loss and accounting fraud.
The EVA evaluation system established by Stern Management Consulting Company has been adopted by more than 300 world-renowned enterprises such as Siemens, Sony and Coca-Cola. Fortune magazine published the list of wealth creation and destruction of American listed companies for eight consecutive years. Recently, China Finance and Economics magazine quoted EVA evaluation index for the first time to evaluate the performance of listed companies.
Hangang Group has achieved considerable success in performance evaluation and control, especially in the cost target evaluation system, which has become an example for domestic enterprises to learn.
Verb (abbreviation of verb) capital control
Capital control refers to the parent company's understanding of the financial situation of its subsidiaries in various ways and controlling the movement order of their funds, such as fund raising, investment, fund utilization and distribution. Refers to the capital flow of subsidiaries and the control of financial activities of subsidiaries according to the requirements of the parent company. The financial activities of enterprises are centered on capital movement, and controlling the capital flow of subsidiaries is equivalent to controlling the business activities of subsidiaries. The control of funds can be started from two aspects, one is financial budget control, and the other is the establishment of internal fund settlement center.
Financial budget models can be divided into various types: capital budget, budget management model based on sales, budget management model based on cost control, budget management model based on cash flow and budget management model based on target capital profit. Any budget management mode has its advantages and scope of use, and enterprises can choose according to their own market environment and industrial life cycle. The parent company formulates the financial budget and requires the subsidiary company to strictly implement it, so that the capital flow of the subsidiary company can be included in the overall capital flow of the group company, so that their values tend to be consistent.
Establishing an internal fund settlement center or a financial company can control the funds of subsidiaries from the perspective of the group as a whole. All subsidiaries set up accounts in the fund settlement center to deposit their own funds, and the flow of each fund is recorded in the settlement center. Because the parent company can grasp the capital flow of each subsidiary, on this basis, it has further strengthened the capital control of its subsidiaries, such as unified account opening, unified deposit and loan business, unified capital utilization and so on.
Tsingtao Brewery Co., Ltd., as a group enterprise with domestic A shares and Hong Kong H shares listed at the same time, its parent company has established a set of effective control methods for the financial management of its subsidiaries. Through low-cost expansion, in just a few years, Tsingtao Brewery has achieved rapid development and growth in both scale and efficiency, and has become the leader of the domestic beer industry. With the rapid development of enterprises and the increasing number of subsidiaries, especially the financial management of merger and acquisition of subsidiaries has become the focus of Tsingtao Brewery's financial work. Through exploration and summary, Tsingtao Brewery Company has achieved certain results in financial control of its subsidiaries and accumulated valuable experience:
1. Apply rules to form a phalanx, with strict management and system first. Combined with the company's own characteristics. The parent company has formulated a unified and complete financial system. From job responsibilities to expenditure approval and fund allocation, everything is meticulous and comprehensive. Ensure the reasonable and orderly development of financial work from the source, and put an end to illegal acts from the source.
2. People-oriented, strengthen management. In order to ensure the smooth implementation of the financial system of the parent company, improve the efficiency and quality of the financial work of the subsidiaries, Tsingtao Brewery has trained a group of high-quality financial personnel and sent them to the subsidiaries as financial directors. The parent company timely summarized the feedback information and questions raised by the financial directors of subsidiaries, and regularly trained and discussed overseas financial personnel by hiring lecturers from well-known financial consulting companies at home and abroad, which not only improved the overall level of financial work within the group, but also strengthened the management of subsidiaries and the control of the parent company over subsidiaries.
3. Clear rewards and punishments, and establish a perfect target assessment system. Tsingtao Brewery Company holds the annual budget meeting and annual final accounts meeting attended by the financial directors of its subsidiaries twice a year. Through the comprehensive budget management and performance evaluation system, it can ensure that each subsidiary can achieve its own business objectives to the maximum extent, and finally promote the smooth realization of the overall goal of the whole enterprise. When formulating the indicators of the evaluation system, the company not only established the evaluation indicators based on the traditional financial management indicators, but also incorporated the international advanced management tools in time. In 2002, Tsingtao Brewery Company implemented EVA index evaluation method, which made the financial information more reasonable and truly reflected the situation.
4. Keep a close eye on the pulse and strictly control the use of funds by subsidiaries. Tsingtao Brewery Co., Ltd. has already set up an internal fund settlement center to avoid the losses caused by improper fund management of factoring companies. At the same time, Tsingtao Brewery Co., Ltd. also fully considered the inconvenience brought by its subsidiaries in the actual operation process, especially in view of the difficulty of credit for its subsidiaries, and signed a national credit contract with domestic commercial banks through multi-party coordination. In 2003, Tsingtao Brewery Company signed a strategic alliance agreement with Anheuser-Busch Company of the United States, and used convertible bonds to raise/kloc-0.5 billion yuan, which laid a solid foundation for the future development of Tsingtao Brewery Company.
Through the unremitting efforts of Tsingtao Brewery Company, the company has achieved good results. In 2002, the company's income and profits increased in an all-round way, while expenses and expenses dropped sharply. Realized the maximum profit of 1993 after listing.
To sum up, the parent company's control of subsidiaries is mainly people-oriented. Through effective supervision of the financial behavior of subsidiaries before, during and after the event, the financial control of subsidiaries is strengthened by using auxiliary means such as assessment and separation of income and expenditure. The parent company can also combine the actual situation of the company and its subsidiaries and adopt methods suitable for enterprise groups. It should be pointed out that each method has its advantages and disadvantages. How to combine all kinds of methods organically and learn from each other's strengths needs the parent company to explore in practice to make it more suitable for the actual situation of the enterprise.
Paragraph 2 of Article 13 of China's Company Law stipulates: "A company may set up subsidiaries, which have the qualifications of enterprise legal persons and independently bear civil liabilities according to law." It can be seen that China's company law believes that the debt liability relationship between the parent company and its subsidiaries is independent of each other, that is, the parent company and its subsidiaries are independent of each other in law, and they are independent legal persons and bear their responsibilities independently. However, in practice, this "one size fits all" rule is too general, which is not conducive to protecting the legitimate rights and interests of external creditors and minority shareholders of subsidiaries, and even harming the interests of the countries where subsidiaries are located. In view of this, the author intends to discuss this issue from the basic principles of civil law in order to improve the relevant provisions of China's company legislation.
With the development of world economic integration and the improvement of China's market economic system, group companies and multinational companies have also made great progress (according to the World Investment Report 1995, there are currently 250,000 foreign branches among the 40,000 multinational companies in the world, with global overseas sales exceeding 6 trillion US dollars). At the same time, the debt liability relationship between the parent company and its subsidiaries has aroused widespread concern.
Under normal circumstances, the parent company and its subsidiaries are legally independent legal entities established through the principle of limited liability, and they do not bear legal responsibilities for each other. But economically, they are inextricably linked. The parent company controls and manages its subsidiaries in terms of capital, technology, brand, senior management and development strategy. However, in the event of a debt relationship, according to the principle of limited liability of legal persons, each subsidiary can only be independently responsible for its debts, and the parent company is not responsible. In this way, if a subsidiary goes bankrupt and its bankrupt property is few, the creditors of the subsidiary can't be paid off basically, and whether it can claim compensation for the property of the parent company becomes a very complicated and difficult legal issue.
In fact, the Bhopal gas leak in India raised such a problem. 1984, the methyl isocyanate metal cans stored in Bhopal, India by United Carbide India Co., Ltd. (an Indian subsidiary of United Carbide India) leaked, causing more than 2,000 deaths of local residents and hundreds of thousands of injuries. After the case, representatives of some victims and the Indian government filed a lawsuit against the compensation case of the American parent company in the federal court of new york, which rejected it as an "inappropriate court" after a year's trial. The Indian government filed a lawsuit with the Indian court with 1986. The plaintiff believes that the American parent company has an unshirkable responsibility for the tragedy. Because the Bhopal factory was designed by the American parent company, it did not install the emergency early warning computer system that its American similar factory must install; At the same time, the company did not warn the residents living near the factory of the danger of this highly toxic gas, and the assets of the Indian subsidiary could not meet the plaintiff's claim for compensation at all. The American parent company should be directly responsible for this tragedy. By 1989, the Indian government had reached a compensation agreement with the United Carbide Company of the United States, and the American company took compensation of 470 million dollars as the final solution to the accident. [1] The core issue of this case is the debt liability relationship between the parent company and its subsidiaries, that is, whether the parent company should be responsible for the debts or other obligations of its subsidiaries.
Generally, there is no uniform special law in various countries to adjust the debt liability relationship between the parent company and its subsidiaries. In most cases, according to the principle of limited liability of legal person, there is no legal basis for making the parent company liable for the debts of its subsidiaries. However, considering the particularity of the economic relationship between the parent company and its subsidiaries, we strictly follow the principle of limited liability and separate the legal responsibilities of multinational corporations and group companies from their economic ties. Therefore, although the bankruptcy law or company law of some countries still adhere to the principle of limited liability as a general principle, in practice, some exceptional measures are often taken to make the parent company bear certain responsibilities for the debts of bankrupt subsidiaries. The forms of expression include unveiling the corporate veil, comprehensive responsibility of multinational enterprises, strict responsibility, and special provisions of the company group law. [2] In the case of Bhopal's claim, the indictment filed by the plaintiff in the American court advocated that the multinational corporations should be held accountable, arguing that there is actually only one entity-the multinational corporations as a whole, and the multinational corporations that caused the damage should be responsible for this damage.
From the current practice, there are two ways to make the parent company directly responsible for the debts of its subsidiaries. First, based on some exceptions of the traditional limited liability principle, the company veil is unveiled and the responsibility of the parent company is investigated; The first is to make direct provisions through the special company group law. [3]
One of the most common exceptions to the traditional limited liability principle is the theory of "uncovering the company", which can be summarized as: (1) agency, that is, if the subsidiary is the "agent", "tool" and "incarnation" of the parent company, then the parent company will be responsible for its creditors. (2) the improper behavior of the parent company, that is, the parent company violates the obligation of reasonable care to the subsidiary, conducts some improper management or intervention for its own interests, damages the interests of the subsidiary and its creditors, and even leads to the bankruptcy of the subsidiary. (3) the parent company's control over the subsidiary, that is, the parent company actually controls the subsidiary, abusing its control position and causing damage to the subsidiary. (4) The assets and affairs of subsidiaries and parent companies are excessively mixed, and there is no independent property and affairs decision-making power. (5) Fair and reasonable consideration. In addition, insufficient investment; The establishment of a subsidiary does not conform to normal procedures; Identity or duplication of parent company and subsidiary company (including meetings, directors, business activities, owners, operation and management, bank accounts, employee control, advertisements, assets, etc.). ); False statements about the company's assets and financial status, fraud and other reasons can also make the courts of various countries lift the veil of the company in practice. [4]
It is unique in the world that Germany directly stipulates the responsibility relationship of company groups in the form of legislation. According to the German Law on Joint-stock Companies (1965), the parent company and the subsidiary company are different according to different situations: (1) When the parent company and the subsidiary company are linked through a control contract or a profit transfer contract, the parent company has the obligation to make up for the annual loss of the subsidiary company. The parent company is not directly responsible for the debts of the subsidiary, but the creditors of the subsidiary are indirectly protected because the company cannot show any net loss. (2) For the de facto company group (that is, the parent company and its subsidiaries are not connected through the enterprise contract, but the subsidiaries are actually managed by the parent company), the parent company is allowed to intervene in the affairs of its subsidiaries, but it must compensate each individual and certain damages. (3) In the case of integration (that is, the parent company holds all the shares of the subsidiary), the parent company is directly responsible for all the debts of the subsidiary. [5]
Paragraph 2 of Article 13 of China's Company Law stipulates: "A company may set up subsidiaries, which have the qualifications of enterprise legal persons and independently bear civil liabilities according to law." It can be seen that China's company law believes that the debt liability relationship between the parent company and its subsidiaries is independent of each other, that is, the parent company and its subsidiaries are independent of each other in law, and they are independent legal persons and bear their responsibilities independently. In other words, China's company law still adheres to the principle of limited liability in the debt liability relationship between the parent company and its subsidiaries, making no exception.
As mentioned above, the debt liability relationship between the parent company and its subsidiaries, or adhering to the principle of limited liability as in China, or adopting the theory of "unveiling the company veil" as in Britain and the United States, or making enumerated direct legislative provisions on the liability relationship of the company group as in Germany, all have merits, but they are either biased or violate the independent spirit of the market economy, and have not properly solved the debt liability relationship between the parent company and its subsidiaries.
Starting from the basic principles of civil law, it should be clear that the debt liability of the parent company and the debt liability of the subsidiary company are both civil liabilities. Civil liability is mainly manifested in two forms, one is the liability for breach of contract and the other is the liability for tort. The liability for breach of contract is the legal consequence that the parties to a contract should bear if they violate their obligations stipulated in the contract. It is civil liability based on contract, and its main nature is compensation. Tort liability is the legal consequence of infringing others' property or personal rights, and it constitutes a civil liability system with breach of contract, but they are essentially different. Generally speaking, the liability relationship of a subsidiary arising from its business activities may be the liability for breach of contract or tort. In view of the essential difference between breach of contract and infringement, the debt liability relationship between parent company and subsidiary company cannot be generalized, but should be analyzed differently.
First of all, if the debt of the subsidiary is based on the contract, then the legal provisions of liability for breach of contract should be applied. According to article 107 of the Contract Law and a series of subsequent provisions, the liability for breach of contract is based on the principle of no-fault liability. Therefore, if a subsidiary enters into a contract with other economic entities, and a default debt is generated based on the contract, the subsidiary shall bear the debt liability according to its default behavior. At the same time, because the debt liability is based on the existence of a valid contract, and a valid contract must be based on the equality and consensus of both parties, the contractual rights and obligations are also the result of the autonomy of the parties. As a legal and independent subject who can conclude a contract, no matter which party, it must be independently responsible for its own free choice of the counterpart of the contract and the judgment of the contract content. Therefore, the counterpart of the contract can only claim the default creditor's rights from the subsidiary, but not from the parent company of the subsidiary, which is also in line with the concept of freedom of contract and the limited liability principle of the company law.
Secondly, if the debt of the subsidiary is caused by the tort of the subsidiary, the legal provisions of tort liability should be applied. Different from the liability for breach of contract, tort liability generally occurs between parties who have no contact in advance, and they have no intention of contacting each other, let alone any agreement on rights and obligations. In the field of tort law, the obligation not to infringe others' property rights and personal rights is legal. Therefore, "in modern society, although there are significant differences in social systems, historical habits and economic development among countries, the tort laws of all countries are based on the principle of fault liability." [6] At the same time, many countries have also stipulated systems such as presumption of fault, strict liability and inversion of burden of proof for special tort, so as to make up for the deficiency of fault liability and fully protect the legitimate rights and interests of the infringed. Generally speaking, different from the concept of freedom of contract and relativism in the liability for breach of contract, in the liability for tort, the legislation and practice of various countries are more biased towards fairness and justice, public order and good customs, and more focused on protecting the interests of the infringed and the public. Therefore, for the debt liability relationship between the parent company and the infringing subsidiary, we should fully consider the principles of fault, inversion of burden of proof, fairness and presumption of fault, and decide to let the parent company bear part or all of the responsibility according to the degree of autonomy of will enjoyed by the subsidiary and the influence of the parent company on the damage results caused by the infringement of the subsidiary. This can be divided into two aspects. First, if the subsidiary is completely independent, the parent company will not exert any influence on the infringement result of the subsidiary, and the subsidiary should bear the infringement debt independently; Second, if the result of infringement is that the parent company exerts all or part of influence on the command and management, interference or other aspects of the subsidiary, the parent company shall bear all or part of the responsibility for paying off the infringing debts of the subsidiary. In short, whether the parent company should bear joint and several liability for the infringement of its subsidiaries and the size of the liability should be determined according to the fault of the parent company for the infringement of its subsidiaries.
To sum up, China's "Company Law" does not clearly define the parent company and subsidiaries, nor does it specifically stipulate the special legal relationship between them. The second paragraph of Article 13 of the Company Law is only a few dozen, which is too general to operate and protect the legitimate rights and interests of external creditors and minority shareholders of subsidiaries. In addition, with China's accession to the WTO, multinational companies have set up subsidiaries in China more and more frequently, and the existing company legislation alone can no longer solve the disputes over the liability relationship between parent and subsidiary companies, such as the Bhopal gas leakage case mentioned above. Therefore, the author advocates that the second paragraph of Article 13 of the Company Law should be refined immediately. Specifically, as mentioned above, the liability of subsidiaries can be divided into two situations: breach of contract and partial infringement. In the case of breach of contract and partial infringement, the traditional principle of limited liability can be adopted, and the subsidiary company is solely responsible for the default debt of the counterpart. In the case of another part of the infringement, depending on the consequences of the subsidiary's infringement and the size of the parent company's fault, the parent company is required to bear all or part of the liability for the infringing debts of the subsidiary. In terms of legislative style, Article 13 of the Company Law can be amended by combining the principle provisions with the specific provisions, or relevant laws and regulations can be specially formulated like German legislation.