Legal Personality of Multinational Corporations and Its Consequences

Multinational Corporations (MNCs) establish subsidiary companies in various countries to expand their operation all over the world, and to invest in industrial areas of developing countries. MNCs have gained increasing importance and expansion after the Second World War. The most common structural model for a multinational enterprise is the pyramid one. In this model, a parent company is placed at the head of pyramid, and subsidiaries are owned and controlled by the parent company. In MNCs the Parent company and also each subsidiary has the nationality of its registrar country. MNCs have civil and criminal responsibility for damages to third parties. The interconnected management of subsidiaries and the parent company, and the fact that subsidiaries are controlled by parent company determine the responsibility of the parent company for subsidiary companie's operations.