When is a Parent Company Liable for Its Subsidiaries’ Debts?
When a company goes bankrupt and creditors are left empty-handed, a crucial question often arises: can the parent company be held liable? In this article, you’ll learn everything about corporate and group liability in the Netherlands. We explain in clear terms when a parent company must pay for its subsidiaries’ debts, and what defenses are available.
Whether you’re a creditor seeking recourse, a director of a parent company looking to limit risks, or an advisor managing corporate structures – this complete guide provides practical tools and current legal insights.
In this article you’ll learn:
- When parent companies are liable for subsidiary debts
- The difference between the 403 declaration and group liability
- Practical defenses for corporate entities
- How creditors can maximize recourse
- Current case law and recent developments (2025)
- Limitation periods and how to interrupt them
Reading time: 15 minutes | Last updated: December 2025
What is Corporate and Group Liability?
Before diving into the details, let’s start with the basics. Corporate and group liability are legal mechanisms that prevent companies from hiding behind complex corporate structures.
In short:
- Corporate liability = A parent company becomes liable for its subsidiaries’ debts
- Group liability = Multiple companies within a group are jointly liable for damages they collectively cause
These rules protect creditors who would otherwise be left high and dry when bankruptcies occur within corporate structures.
The Legal Basis: Which Laws Govern This?
Dutch law provides two important routes for liability within corporate structures. Both are in the Civil Code but work very differently.
Route 1: The 403 Declaration (Article 2:403 Dutch Civil Code)
This is the most well-known form of corporate liability. A parent company voluntarily declares itself jointly and severally liable for its subsidiaries’ debts.
Why would a parent do this?
Often this is a condition for certain accounting benefits. The subsidiary can then publish abbreviated financial statements, which is administratively more convenient.
Result for creditors:
You can seek recourse directly from the (usually wealthier) parent company. No hassle with empty subsidiaries – the parent pays.
Important articles:
- Article 2:403 Dutch Civil Code: The 403 declaration itself
- Article 2:404 Dutch Civil Code: When this liability ends
- Articles 2:24a and 2:24b Dutch Civil Code: Definitions of parent, subsidiary, and group
Route 2: Group Liability (Article 6:166 Dutch Civil Code)
This route works differently. Here it concerns unlawful conduct by multiple companies together.
When does this apply?
If companies within a group do something together that causes damage, they are all jointly and severally liable. Even if not every company individually caused that damage.
Condition:
The risk of damage should have deterred them from their conduct. In other words: they could and should have foreseen that their collective actions would lead to damage.
Practical example:
Suppose three companies within a group dump chemical waste together. One company handles transport, one supplies the barrels, one gives the order. All three can be liable for the total environmental damage, even though each company only did a small part.
What Does “Jointly and Severally Liable” Mean?
This legal term is crucial. It means: the creditor may hold each of the liable parties responsible for the full amount.
Advantage for creditors: You don’t have to collect a piece from each company. You simply choose the party with the deepest pockets.
Result for companies: If one party pays the full damage, this party can hold the other liable parties responsible for their share (this is called “recourse”).
Important Case Law: When Do You Become Liable?
The law provides the framework, but courts determine how this works in practice. These judgments are essential for understanding when liability arises.
The Comsys Judgment: “When Must a Parent Intervene?”
What happened?
A subsidiary went bankrupt. Creditors wondered: shouldn’t the parent company have intervened?
What did the Supreme Court rule? (ECLI:NL:HR:2009:BH4033)
A parent company only has a duty of care toward its subsidiary’s creditors under special circumstances. For example when:
✓ The parent is actively involved in the subsidiary’s policy
✓ The parent knowingly allows risks to arise for creditors
✓ The parent misleads creditors about the financial situation
Practical meaning:
A parent doesn’t always have to intervene with problems at the subsidiary. But those who knowingly let risks run or mislead creditors can be liable – even without a 403 declaration.
Group Liability: “Acting Together = Paying Together”
Recent judgment 2025 (ECLI:NL:HR:2025:1055)
The Supreme Court confirmed: if companies within a group cause damage together, they are all jointly and severally liable. Even if not every company individually caused that damage.
The rule:
It’s about the collective conduct and the foreseeability of damage. Should they have understood that their collective actions would lead to damage? Then they are all liable.
Important follow-up questions:
- Must each company have contributed equally? No
- Must each company have directly caused the damage? No
- Must each company have been involved in the decision? No
What is required: each company must have made a relevant contribution to the group conduct that led to damage.
Further Legal Development
The judgments ECLI:NL:HR:2015:837 and ECLI:NL:HR:2018:1899 clarified where the boundaries lie. The common thread: attribution is the key word.
Liability only arises if the conduct that led to damage can actually be attributed to the company. Merely being part of a group is not enough.
When is a Parent Company NOT Liable?
This is perhaps the most important question for parent companies: when don’t you have to pay for your subsidiary’s debts or mistakes?
The Three Main Rules
1. No Actual Leadership = No Liability
If a parent company did not provide actual leadership to the conduct that led to damage, it is not liable.
Practical example:
A subsidiary illegally dumps waste. The parent was not involved in this decision and knew nothing about it. The parent is then not liable, unless it should have intervened (see Comsys judgment).
2. No Conscious Contribution = No Liability
The parent must have consciously contributed to the risky conduct. “Not knowing” can be a defense, but beware: if you should have known, you can still be liable.
3. No Decisive Influence = No Liability
Especially relevant in European competition law: a parent is only liable if it exercised decisive influence on the subsidiary’s conduct.
Burden of proof: The parent must demonstrate that it exercised no influence. This can be shown by demonstrating that:
- The subsidiary operated independently
- Decisions were made without the parent’s knowledge
- There was no interference with daily policy
What Does “Attribution” Mean?
This legal term is the core of the limitation of liability. Article 6:166 Dutch Civil Code requires that:
- The damage-causing conduct can be attributed to the parent
- The risk of damage should have deterred the parent from that conduct
Practical translation:
- Did the parent influence the decision? → Yes = attribution
- Could the parent foresee the damage? → Yes = should have deterred
- Did the parent play no role? → No = no attribution = no liability
European Competition Law: Special Rules
In cartel cases, additional rules apply (ECLI:NL:HR:2023:965):
Presumption of influence:
If a parent owns 100% of shares, it is presumed to exercise decisive influence.
Rebutting this presumption:
This can be done by demonstrating that the subsidiary operated independently in fact. Providing evidence is then crucial:
- Separate management teams
- Independent decision-making
- No parent interference with strategy
- Own market approach
Recent Development: Stricter Test (2020-2025)
In ECLI:NL:HR:2020:1726, the Supreme Court emphasized that attribution is the absolute boundary.
What does this mean in practice?
Courts now look more critically at actual involvement. Formal relationships (such as shareholding) are not enough. There must have been real influence on the damage-causing conduct.
Good news for parent companies: If you can demonstrate you were not involved, you have an increasingly strong position.
Defenses for Individual Group Companies: “I Didn’t Do Anything!”
An individual group company is often in a difficult position. You’re part of a group, damage arose from group conduct, but you didn’t directly participate. Are you still liable?
The Most Important Defense: “No Relevant Contribution”
The rule from the TVM judgment (ECLI:NL:HR:2015:2914):
You are only liable if you made a relevant contribution to the conduct that led to damage.
What is NOT enough for liability?
❌ Just being a member of the group
❌ Receiving money from other group members
❌ Being present at meetings
❌ Benefiting afterward from the conduct
What IS required for liability?
✓ Actually participating in conduct that increased the risk of damage
✓ Knowing or should have understood that this risk existed
✓ Playing an active role in the damage-causing process
Practical Example from Case Law (2025)
Case: Three companies within a group are accused of group liability. Company A made the decisions, Company B executed them, Company C only received money.
Judgment (ECLI:NL:PHR:2025:659):
- Company A: liable (made decisions)
- Company B: liable (executed)
- Company C: not liable (only receiving money is not a relevant contribution)
How Do You Raise This Defense?
Step 1: Assert and prove
It’s not enough to say “I didn’t do anything.” You must provide concrete facts:
- Minutes showing you were not involved
- Emails demonstrating you were not informed
- Organizational charts showing you had no authority
- Witness statements from those involved
Step 2: Refute the assumption of involvement
If you’re part of a group, courts readily assume you were involved. Break that assumption with evidence of:
- Separate decision-making
- Own management structure
- No knowledge of the activities
- No benefit from the conduct (except normal dividends)
Step 3: Show you couldn’t have known about the risk
Even if you did something, you are only liable if you knew or should have known the risk.
Example:
You sell products to a sister company. You didn’t know this sister company used these products for illegal practices. You can then demonstrate you had no reason to suspect this.
Burden of Proof: Who Must Prove What?
Step 1 – Creditor:
Must assert facts from which group liability may follow.
Step 2 – Your company:
Must make plausible that you made no relevant contribution.
Note: “Making plausible” is less heavy than “proving conclusively.” You don’t have to be 100% certain, but must convincingly support that you were not involved.
Guide for Creditors: Which Route Do You Choose?
As a creditor within a corporate structure, you have an important choice: do you go for the 403 declaration (Article 2:403 Dutch Civil Code) or for group liability (Article 6:166 Dutch Civil Code)? And can you use both routes simultaneously?
Good News: You Can Choose (and Combine!)
Confirmed in case law (ECLI:NL:PHR:2025:1328):
- You are authorized to use both routes
- You are not obligated to choose
- You may use both routes alongside each other
- You may try both routes one after the other
Route 1: The 403 Declaration
When do you choose this route?
✓ A 403 declaration has been issued
✓ You want to go directly to the parent company
✓ You don’t want to provide proof of involvement
✓ You’re seeking the wealthiest party
Advantages:
- Direct liability of the parent – no discussion about involvement
- Clear basis – parent has made itself liable
- Recourse from richest party – parent companies are often wealthier
- Simpler proof – you only need to show the 403 declaration and the debt
Disadvantages:
- Only possible if there is a 403 declaration
- Declaration may have been withdrawn (watch the transition period Article 2:404 Dutch Civil Code)
- Limited to parties covered by the declaration
Route 2: Group Liability
When do you choose this route?
✓ There is no 403 declaration
✓ Multiple companies were involved in the damage
✓ There is unlawful conduct
✓ You want to hold all involved parties responsible
Advantages:
- Broader circle of liable parties
- No 403 declaration needed – always works with group conduct
- All involved parties liable – even if one party is broke
- Joint and several liability – each for the whole
Disadvantages:
- You must prove there was group conduct
- You must demonstrate damage was foreseeable
- Companies can defend themselves (no relevant contribution)
- More litigation and discussion
The Smart Strategy: Combine
Why not both?
You may pursue both routes simultaneously. This significantly increases your chances.
Practical approach:
Step 1: Investigate whether there is a 403 declaration
- Check the subsidiary’s financial statements
- Consult the Trade Register
- Ask the group directly
Step 2: Inventory all involved group companies
- Who decided?
- Who executed?
- Who benefited?
Step 3: Draft summons for both bases
- Primary: 403 liability of parent company
- Subsidiarily: group liability of all involved parties
- More subsidiarily: direct liability per company
Important limitation:
You cannot receive more than full damages. If one party pays, the others are released (Article 6:7 Dutch Civil Code).
Comparison Table: Which Route Suits You?
| Aspect | 403 Declaration | Group Liability |
|---|---|---|
| Requirement | 403 declaration present | Group conduct + damage |
| Burden of proof | Low (only declaration + debt) | Higher (conduct + foreseeability) |
| Liable parties | Parent + subsidiaries under declaration | All involved group members |
| Defenses possible? | Limited | Yes (no relevant contribution) |
| Procedure speed | Usually faster | Often more complex |
| Success rate | High (with valid declaration) | Depending on evidence |
Practical Example: How Do You Choose?
Situation:
You’re a supplier. A subsidiary hasn’t paid you and is bankrupt. The parent company issued a 403 declaration. You suspect three group companies deliberately cooperated to harm you.
Smart approach:
- Primary claim: 403 liability against parent (easiest route)
- Subsidiary claim: Group liability against all three involved companies (in case 403 fails)
- More subsidiary claim: Direct liability per company
Result: You maximize your chances and keep all options open.
Limitation Periods: Don’t Wait Too Long!
One of the most common mistakes creditors make is waiting too long. Limitation periods in corporate liability cases can be complex.
Basic Rule: Five Years
For both routes (Articles 2:403 and 6:166 Dutch Civil Code), the main limitation period is:
Five years after you knew about:
- The damage
- The liable person
Maximum: Twenty years after the event that caused the damage (Article 3:310 Dutch Civil Code)
The Tricky Part: Different Limitation Periods
Important: Each legal basis has its own limitation period. This means:
- The limitation period for the 403 declaration can expire while the limitation period for group liability still runs
- You must interrupt limitation separately for each route
- You must interrupt limitation separately for each liable party
Practical example:
You discovered the damage on January 1, 2020. You knew about the 403 declaration immediately, but only discovered which other group companies were involved on January 1, 2021.
Result:
- Limitation for 403 claim: January 1, 2025
- Limitation for group liability claim: January 1, 2026
How Do You Interrupt Limitation?
The golden rule: Send a written notice to each liable party separately.
What must be in this notice?
✓ Clear description of the damage
✓ Amount of the claim
✓ Indication of liable party
✓ Explicit reservation of rights
✓ Reference to both legal bases (403 and 6:166 Dutch Civil Code)
Important:
- Email is sufficient (but keep proof!)
- Registered mail is safer
- A summons also interrupts limitation
- Make sure the notice reaches the right legal entity
Common Mistakes
❌ Only sending to the parent company
Result: Limitation against subsidiaries is not interrupted
❌ Only mentioning one legal basis
Result: Limitation of other basis is not interrupted
❌ Vague formulation
Result: Court may rule interruption was not clear enough
❌ Sending too late
Result: Your claim is time-barred
Practical Tip: Start a Calendar
As soon as damage arises:
- Note immediately: When did you discover the damage?
- Calculate: Limitation expires 5 years later
- Set alarm: 6 months before expiration
- Act: Send interruption notice to all parties
- Renew: Repeat every 4 years if you haven’t started proceedings
Withdrawal of the 403 Declaration: Watch Out!
A parent company can withdraw a 403 declaration. This is important to know as a creditor.
No Retroactive Effect – But Watch the Date
Good news: Withdrawal has no retroactive effect for existing debts.
The rule (Article 2:404 Dutch Civil Code):
The parent remains liable for debts from legal acts performed before the withdrawal became effective against you as creditor.
When is withdrawal effective?
Only after proper publication and notification. Until then, you can still rely on the 403 declaration.
What Should You Do as a Creditor?
If you hear about withdrawal:
- Act immediately: Send interruption notice
- Secure evidence: Collect all documents showing the debt arose before withdrawal
- Consider: Start proceedings before withdrawal becomes effective
- Negotiate: Possibly request security for existing claims
Future Claims
For new transactions after withdrawal, the parent is no longer liable. Only do new business with the subsidiary if you’re confident in its creditworthiness.
Recourse: Who Pays Internally?
After one group company has paid the full damage, the question arises: who must ultimately bear this?
The Basic Rule: Equal Shares
According to Article 6:166 Dutch Civil Code, group members must contribute equally internally, unless equity requires otherwise.
Example:
Three companies are jointly liable for €300,000 damage. Company A pays everything. Company A can then recover:
- €100,000 from Company B
- €100,000 from Company C
Exception: When Equity Requires Otherwise
Courts look at:
- Who actually caused the damage?
- Who benefited most?
- What was each party’s role?
- What did the parties agree internally?
Example:
Company A gave the order, Company B executed, Company C only knew about it. Court may rule:
- Company A: 60% of damage
- Company B: 35% of damage
- Company C: 5% of damage
Contractual Agreements
Good news for group companies: You can make internal agreements about liability distribution.
Requirements:
- Must be in writing
- Must be clear and unambiguous
- May not conflict with reasonableness and fairness
- Only works internally (not against creditors)
Practical tip:
Record these agreements in:
- Shareholder agreements
- Management service agreements
- Group policy documents
Forfeiture: Can You Still Lose Your Right?
Even if limitation hasn’t expired, you can still lose your right through forfeiture.
When Does Forfeiture Occur?
The strict rule:
Mere lapse of time is not enough. There must be additional circumstances whereby:
- The liable party gained justified expectation you wouldn’t exercise your right anymore
- It would be unreasonable to still allow exercise of the right
Confirmed in case law (ECLI:NL:HR:2025:162)
Practical Examples
Forfeiture accepted:
- You wrote: “I won’t hold you liable”
- You negotiated for years without results and never sent a reminder
- The liable party demonstrably made business decisions based on your inaction
Forfeiture rejected:
- You simply waited a few years
- You were in negotiations
- You were exploring settlement options
How Do You Prevent Forfeiture?
Simple:
- Send regular reminders
- Explicitly reserve your rights
- Don’t make statements suggesting you won’t claim
- Keep negotiations active
Practical Implications for All Parties
For Parent Companies: Risk Management
What are your risks?
⚠️ Joint and several liability with 403 declaration for all subsidiary debts
⚠️ Duty of care toward subsidiary creditors in special circumstances
⚠️ Liability with active involvement in risky activities
How do you limit risks?
✓ Carefully consider before issuing 403 declaration
✓ Document all decision-making and involvement
✓ Create clear governance structures
✓ Take out adequate insurance
✓ Monitor subsidiary activities closely
✓ Intervene timely with problems
For Subsidiaries: Protection Measures
What are your risks?
⚠️ Joint and several liability when participating in damage-causing group conduct
⚠️ Recourse risk toward other group companies
⚠️ Limited defense options with active involvement
How do you protect yourself?
✓ Document your own role and involvement
✓ Make internal agreements about liability distribution
✓ Express reservations for risky group activities
✓ Communicate timely about objections
✓ Insure against group liability risks
For Creditors: Maximum Recourse
What are your options?
✓ Choice between 403 declaration and group liability
✓ Combine both routes
✓ Seek recourse from wealthiest party
✓ Interrupt limitation separately per party
How do you maximize your chances?
✓ Investigate immediately if there is a 403 declaration
✓ Identify all involved group companies
✓ Collect evidence of group conduct
✓ Act quickly with interruption notices
✓ Engage specialized legal counsel
✓ Negotiate strategically with multiple parties
Recent Developments (2020-2025)
Tightening of Requirements
Recent Supreme Court judgments show an increasingly critical approach:
Trend: Mere formal relationships within a group are insufficient. There must be actual involvement in damage-causing conduct.
Effect: Parent companies have a stronger position if they can demonstrate they were not involved.
Protection of Creditors Remains
Simultaneously, courts continue protecting creditors against constructions obscuring recourse possibilities.
Trend: The 403 declaration remains a powerful instrument. Courts interpret this broadly in favor of creditors.
Clarification of Limitation Rules
Case law has brought more clarity about:
- Independent limitation periods per legal basis
- Necessity of directed interruption acts per basis and per party
- Burden of proof for commencement of limitation
Frequently Asked Questions
Can a parent company be liable without a 403 declaration?
Yes, through the Comsys doctrine (duty of care) or through group liability (Article 6:166 Dutch Civil Code).
Can I as a creditor claim from both parent and subsidiary?
Yes, with joint and several liability you may claim the full amount from each liable party.
What happens if the 403 declaration is withdrawn?
You remain protected for debts that arose before the withdrawal became effective.
How long do I have to claim?
Generally five years after discovery of damage and liable party, maximum twenty years after the event.
Can I claim from all group companies?
Only from those who made a relevant contribution to the damage-causing group conduct.
What if one company has already paid?
Then the others are released for the whole (Article 6:7 Dutch Civil Code), but the paying party can seek recourse.
Conclusion
Corporate and group liability form a complex but well-developed legal area in the Netherlands. The legislation offers creditors important recourse possibilities via Article 2:403 Dutch Civil Code (403 declaration) and Article 6:166 Dutch Civil Code (group liability), while corporate entities can defend themselves if they made no relevant contribution to damage-causing conduct.
Key Takeaways:
✓ Parent companies are not automatically liable; required is actual involvement or a 403 declaration
✓ Group companies can defend themselves by demonstrating they made no relevant contribution to group conduct
✓ Creditors have freedom of choice between different bases and can combine them
✓ Limitation periods run per basis and per party; directed interruption is necessary
✓ Recourse between group companies is determined by mutual agreements and equity
✓ Forfeiture is restrictively accepted; special circumstances are required
Final Advice:
For all parties involved, professional legal counsel in complex corporate structures is strongly recommended. Case law continues developing and the facts and circumstances of each individual case determine the outcome.
Don’t wait until it’s too late – whether you’re a creditor seeking recourse or a corporate entity wanting to limit liability, timely action and good documentation are essential.
Last updated: December 2025
Sources: Dutch legislation and case law 2009-2025, including ECLI:NL:HR:2009:BH4033 (Comsys), ECLI:NL:HR:2025:1055, ECLI:NL:HR:2023:965, ECLI:NL:HR:2015:2914 (TVM), ECLI:NL:PHR:2025:1328, and many other relevant judgments.
