Question

Select the most appropriate statement: In Standard Chartered Bank of Australia Ltd v Antico, the court held that the test for classifying an entity as a shadow director involves: Select one: a. Checking whether the parent company encouraged the subsidiary company to take out a loan b. Checking whether the directors of the subsidiary company habitually comply with the instructions of the parent company, over a period c. Whether the parent company influenced one of the business decisions of the subsidiary company d. Checking whether the parent company has a nominee director on subsidiary company's board e. None of these options apply

Answer 1

[W]here a parent company withholds from the subsidiary company the normal consequences of being a

separate legal entity, there is a possibility that the courts will identify it with the controller. This may

happen where a parent company forms or acquires a subsidiary ostensibly to do something for which the

subsidiary needs a minimum level of resources but the parent does not give it adequate proprietors’

capital or loan money, or equip it to run its own business by loan of personnel or other resources or give it

a reasonable chance of independently obtaining credit or resources from third persons. In such a case a

court may hold that the dominated subsidiary is an agent of the parent or a partner with it.