Nmbr 1 answer - brief info of engagement PDF

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Answer to the Question No. 1 (Broad Question)Here Goldminers Ltd is a Parent Company and Howlader Pvt. Ltd is Subsidiary Company. Generally by the information given it may seems like Goldminers Ltd is not liable for the debt of their insolvent subsidiaries, but legally Goldminers Ltd is liable for t...

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Answer to the Question No. 1 (Broad Question) Here Goldminers Ltd is a Parent Company and Howlader Pvt. Ltd is Subsidiary Company. Generally by the information given it may seems like Goldminers Ltd is not liable for the debt of their insolvent subsidiaries, but legally Goldminers Ltd is liable for the debts of their subsidiary company and also it’s the responsibility of Goldminers Ltd to compensate for the Cancer infected employees. The reason why Goldminers Ltd. Is liable for the unpaid loan and seek compensation for the disease: A parent company has separate legal entity no doubt. But if a parent company add a subsidiary company to fulfil the liability and resources, then both parent company and subsidiary company is a single economic entity. A parent company can also be liable for any damage caused if it in any manner participated fraudulently in actions tending to reduce the debtor's assets or exaggerate its liabilities, before or after the bankruptcy. A parent entity (domestic or foreign) can be held liable for the debts of an insolvent subsidiary if it has acted fraudulently, with gross negligence, with willful misconduct and/or in violation to the company bye-laws' provisions, to the detriment of the company and to its creditors, thereby contributing to the insolvency of the company Outbreak of recession in the UK labour market halted the production process in UK. So it’s their liability how they now continue their business. And they choose Bangladesh for operating the production activities with the help of their subsidiary company which forced Howladar Company to take loans of from DLR Bank. So for any circumstances, here Goldminers Ltd is fully liable here. Again we pointed out that subsidiary company howladar winding up the company and their employees are effected with cancer. All these issue makes Goldminers Ltd liable. Because if a parent company misused their subsidiaries in a wrong way, so Goldminers Ltd is liable for the debt of their inslolvent subsidiary and also for the compensation of the disease. Lifting the veil of incorporation and other various case principles: Here court will ignore the term separate legal entity and will find out the real fraud people who are in the real control of the company. That’s why court will apply lifting the veil of incorporation to find out the culprit who has driven the company in a wrongful way. In reality, Goldminers Ltd is an association of persons who are the real beneficiaries of the corporate advantage. Goldminers Ltd will be looked upon as a legal entity as a general rule, but here the notion of Goldminers is used to defeat public convenience, justify wrong, protect fraud and defend crime, so the law will regard Goldminers as an association of persons and the court will apply the principle of lifting the veil of incorporation. Winding up by Court: Howladar Private limited started the process of winding up the company. They can follow winding up by court. Because according to the companies Act, 1994 a company maybe wound up by the court if the company is unable to pay its debts. Company avoiding legal obligations: Goldminers Ltd joined with Howladar Ltd to hide their liability and they also didn’t compensate for the cancer infected employees. So Goldminers failed to keep their legal commitment as they are legally

bound by law to be liable for their insolvent subsidiaries. So in such cases, lifting the veil of incorporation is essential by the court to find out the real transactions and the fraudulent use....