... becomes liable for the subsidiary's debts. Under section 588V of the corporations act indicates that a holding company becomes liable when it incurs the debt, becomes insolvent through incurring the debt and there are grounds for suspected the company is insolvent or is to become insolvent. Advantages of Limited Liability, and effect on contract and tort creditors. Through having limited liability for companies in a corporate group there are many advantages which encourage this form of structure to take place. Salomon's principle for a company in a corporate group to have limited liability give the holding company an ability to maintain control in a subsidiary and gives it an advantage of taking calculated risks to improve shareholders wealth. By lifting the corporate veil and making the parent company liable for the debts associated with the subsidiary makes it hard for diverse investments and risk taking which has manifested itself with this ...

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