But corporate groups should take note of the legal
developments in the UK, where in a recent case Chandler
v Cape, the Court of Appeal (while explicitly stressing
that this was not a case where the corporate veil could be
pierced) found that a parent company owed a direct duty
of care to an employee of one of its subsidiaries.
However, the bottom line is that if the malpractices,
scandals or disasters are sufficiently significant, it is the
parent company that pays the price in terms of damaged
reputation (think Perrier), share price valuation (Ahold,
BP and News Corp), demise (think Arthur Andersen) and
bankruptcy (think Barings Bank).
Subsidiary governance, in other words, is about balancing
the group business objectives and group companies
while recognizing the independence of subsidiaries. In
some cases, the first challenge of subsidiary governance
relates to raising awareness among management about
the difference between the legal organization and the
business organization. But on a more fu ?[Y[?[]?[ ??]\? ?\]Z\?Y\? ?\?[X]X? ??? ?Y[?Y?H?^B??[[??\?[?Y[?Y?H??? ?X?X?\???]\??? \?H ?X\??? ]]??[XZ\? ?] \[??[?\??][?[\?????H??X??YX\?H??\??[??H X??H \???\^ Y]?X?X[ ?X?]??[XZ ?[?B????[?? ?]H?[X?\????[[? ?Y?[?[??\[?Y\??^ ?[?? Z\???[Y]????[?]?[?[???\?H ? YY\??H [ [X]H??[\? ???][]HH ?]? ?X??[Y[?][??? ?X??YX\?H??\??[??H ? ?\ ? H???[???\?Z[?X?[] H???\??\[?Y\??]\?H ??YB?[?]X[ ?\ ???X??YX\?H??\??[??H[? ?X?X?H8?$? ??YH ?X?X?[ ?\ ??K???\[?Y\? ??[]?[?H ???\?????\??YZ[?Z\? ?X??YX\?Y\?[? \? ??[ ?\????H H ?\?B???X][?? ?X??YX\?Y\?\? ???\?? ??[?\?Y?H B? \???H? H ?X??YX\?H ?[?^H[?\??[ ?Z?Z?\???Y??H ^H\?H\?X?\?Y ??????X\???\??[??H ? ?X? \?\? ??[?H\?X?\?Y] B??X??YX\?H]?[ ?\???[?\? H[\Y\? ] H ?[]?[??]??]\??H????Y ?][?\??[??[Y[?][???[[???] HX] \?? ?\?\??Y?? H ?\?Z?\? ?K?X] \?? ?\?\??Y?? H ?X??YX\?H]?[??\? [??X] \?? ]\?H[Y?]Y ? HX[?Y?[Y[? ???\? ]\?H???X\?? Z\? ??H[???\? ? ]\?H???[\??\?Y\?H??Z?[ H ?Y ?[ YK??????]H??\??[??H ??[?H[??Y ?] \???X[??B??]\? [??\??? ?? ?[???\X[??K????[? \??[?\????? [?[????]H??\??[??H?X??Y\?[??\?][H ??H X??Y?H H[?\??[]Y]\\?Y[? ???L???]??[XZ\??YL ?
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