The multinational of today, and often the national company too, is set up as a collection of legally independent companies and artificial persons that are bound together organizationally to form an economic entity. The underlying idea is that these subsidiary companies take on as much as possible the liabilities for that part of the group where the profits are created (the parent company). It often involves companies that pursue economic activities in more than one country.

The legal system means that groups have to adopt a flexible position and structure, and 'shift' liability in a legally sound manner for the benefit of their activities. For example, it is possible that a parent company will be asked to accept voluntary liability for its subsidiaries. This is what is known as issuing a '403 declaration'. Guarantees may also be asked in order to spread the risk within the group. The same thing can be achieved by providing security, suretyship, etc.

A range of legal constructions can therefore be used to cover liability and financial risks. Even so, the situation can arise where companies are exposed to involuntary liability. In many cases this is a subsidiary with no assets from which a debt can be recovered, and so the creditors claim from the parent company direct.

The legal problem of group liability not only places stringent requirements on the quality of legal services, but also demands an international network for effective action to be taken at an international level. Our specialist lawyers all possess these qualities and can act fast and effectively through short lines of communication, both in the Netherlands and abroad in cooperation with our partners in CMS.