financial support undertaking
financial support undertaking
Can a subsidiary gives undertaking to provide financial support to parent so that the parent can meet its obligation as and when they fall due?
Re: financial support undertaking
Doesn't really make sense to me... the parent controls the sub anyway so you don't really need any undertakings.
Re: financial support undertaking
what do you mean by 'giving undertaking'?
Re: financial support undertaking
Presumably it's about a letter of support in an audit scenario?
Re: financial support undertaking
Yes letter of financial support. The subsidiary is operating entity and in good financial position.
Re: financial support undertaking
Then why not. But I agree with JRSB that it makes little sense, unless we're talking about some really exceptional circumstances.
Re: financial support undertaking
Perhaps there's an extremely influential NCI who has other plans for surplus cash (wants to reinvest rather than dividend or loans to parent) but then there could be a bigger question of control. If it is indeed a subsidiary then it's controlled and probably appoint the people they want to the Board, ie pieces of paper not required
Re: financial support undertaking
Agreed. But then if the auditors find this paper to be a useful CYA for them, why not give it to them