A parent company that allows a subsidiary to openly
refer to its being part of a group of companies (e.g. by reproducing the group’s logo on its letterhead) enables the subsidiary to benefit from the group’s reputation. By doing so, the parent creates legitimate expectations about group integration. Bona fide recipients of reference to the company being member of a group are entitled to consider the parent as a de facto director, that has overtaken or at least shares responsibility for managing the subsidiary.
Should the parent not take and fulfill its management duties seriously, it can be hold liable vis-à-vis shareholders and creditors that have relied upon the existence of a group – with a claim for damages which can be based upon the «Vertrauenshaftung» doctrine (what Anglo-Saxons may refer to as a constructive fiduciary duty doctrine) currently popular in Germany and Switzerland.