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Consolidated Accounts

  • 08-03-2011 11:14am
    #1
    kwat
    Registered Users, Registered Users 2 Posts: 198 ✭✭


    Hi,

    Wondering can anyone help me on the below.
    I'm looking at a publicly quoted german companies consolidated financial statements (X). There is one particular company (also german) included as part of the consolidated accounts (Y), in which X has a 54.3% direct stake.
    Can anyone tell me if company Y is therefore guaranteed by company X as a result of being majority owned and consolidated in the accounts of company X?
    And is this the case for all subsidiaries? i.e. if they are included in the consolidated accounts and majority owned can you therefore rely on the parent to guarantee their liabilities?

    Thanks


Comments

  • #2
    HeinekenTicket
    Registered Users, Registered Users 2 Posts: 146 ✭✭HeinekenTicket


    No.


  • #3
    kwat
    Registered Users, Registered Users 2 Posts: 198 ✭✭kwat


    So is this ever the case, or would you need to get a direct guarantee from the parent company?
    HeinekenTicket wrote: »
    No.


  • #4
    SBWife
    Registered Users, Registered Users 2 Posts: 1,287 ✭✭✭SBWife


    Legally (which is what matters in this case) they are separate entities. You would need a specific guarantee from the parent company.


  • #5
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi

    Normally no, unless the parent has given an undertaking or guarantee that it will support the subsidiary. This could be done if for example the group felt it was important that the subsidiary was protected due to strategic reasons. Also assuming that the subsidiary is not an unlimited company.

    Also under Irish Company Law, if you are availing of the option for the subsidiary company to file the accounts of the holding company with its annual return instead of its own accounts (I believe its s18 CA1986) then the holding company must guarantee the liabilities of the subsidiary. However I believe that this section is only relevant to Irish registered subsidiary and would not apply to German ones.

    Hope this helps

    dbran


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