Security & Collateral · glossary
A guarantee a subsidiary gives for its parent's debt. Tooling gives one for the Company's loan, so Tooling's directors must record why it benefits Tooling itself, and its shareholder approves it. Chapter 7 · see Corporate benefit, Guarantee
Explained in Chapter 7, The Guarantor, the Group and the Negative Pledge, of Security & Collateral.
Tooling's directors owe their duty to Tooling, not to its parent or the group (section 172 of the Companies Act 2006). Yet Tooling receives none of the £12,000,000 loan. A subsidiary that guarantees its parent's debt gives an upstream guarantee, and the reason it helps the subsidiary is called corporate benefit.Read Chapter 7, The Guarantor, the Group and the Negative Pledge →
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