Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


The Legal Basis for a Holding Company's Liability for its Subsidiary's Debt: Comparative Analysis of the UAE and the Egyptian Legal Systems

Author(s): Fady Tawakol, Walaa Eldeen Ibrahim, Nayel Musa Alomran

Rapid changes have tested and will continue to test the limits of liability in tort law. To date, much pressure has been applied to the principles governing the liability of a holding company since the doctrine of veil piercing has fallen out of favor with many courts. This article studies the legal basis of the holding’s liability for its subsidiary’s debts in the light of two contradicting principles: The ‘legal independence’ and the ‘economic dependence’ of the subsidiary. The study concludes that it makes no sense to make the holding company carry out full custody of its subsidiaries, but meanwhile, parties injured by subsidiaries can make a claim on the holding if a direct duty of care has been breached. Therefore, much wisdom is needed to estimate the civil responsibility of the holding company. Thus, this article analyses the court decisions, laws, and policy considerations governing a holding company’s liability in the UAE and Egypt.

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