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However, given their controlling interest, parent companies often have considerable influence over their subsidiaries. They?along with other subsidiary shareholders, if any?vote to elect a subsidiary company's board of directors, and there may often be a board-member overlap between a subsidiary and its parent company.
A parent company may incur liability if it holds itself out as exercising supervision and control of its subsidiaries, even if in reality, it did not do so. Group policies and standards set by parent companies to their subsidiaries can never create a duty of care, in circumstances where the parent did not enforce them.
A subsidiary can have legal control of itself, but delegate its management functions to a parent company. A parent company may incur liability if it holds itself out as exercising supervision and control of its subsidiaries, even if in reality, it did not do so.
Vicarious liability, or imputed liability, is indirect liability for the actions of a another person, such as a subordinate or child. An employer can be held liable for the unlawful actions of an employee, such as harassment or discrimination in the workplace.
In the U.S., the general rule is that parent companies generally are not liable for the actions of its subsidiaries unless the plaintiff can prove an agency or alter ego relationship.