A particular form of international business which involves transfer of capital, assets, management etc. over to a foreign institution is known as Foreign Direct Investment (FDI). There are certain ways of investing or FDI in a foreign country; which may include partnership, franchising, acquisition of an ongoing business, opening a branch or may be incorporating a subsidiary company. Among all these a subsidiary deserves some consideration from a legal point of view. It is largely because FDI through a subsidiary often creates a legal vacuum, in relation to the control, between the Home Country Company (Parent Company) and the Host Country Company (subsidiary). This blog addresses few of the issues regarding the lack of accountability of the Multinational Corporations, and some of the ways the courts have adopted over last few years to circumvent those legal lacuna.
