TITLE:
Corporate Groups under the Laws of Rwanda: An Economic Reality without Legal Identity
AUTHORS:
Dieudonné Nzafashwanayo
KEYWORDS:
Corporate Group, Legal Entity, Economic Interdependence, Control
JOURNAL NAME:
Beijing Law Review,
Vol.7 No.2,
May
12,
2016
ABSTRACT: Corporate groups have become common in and dominate the business world. They emerge from reconfiguration of large companies into a multitude of subsidiaries from the simplest radial structure to the complex pyramidal and circular structures, in all structures, all companies within the group being ultimately held by a single parent company. Despite the omnipresence of corporate groups and their place in business world, their legal nature is yet to be seen whereas the use of this structure (corporate groups) to conduct business leads to tensions with traditional corporate law notions of each company being a separate legal entity and the blurring of lines of independence and modus operandi of corporate groups can be dangerous for creditors, employees, minority shareholders and pose challenges for regulators (such as taxman and anti-trust regulatory bodies) assessing the status of transactions conducted within the group. This article will discuss the notion of corporate groups under the laws of Rwanda and will argue that, albeit the fact that corporate groups (under traditional principles of corporate law) do not have legal existence, in some branches of law such as tax, anti-trust, employment, banking and finance law, the same have got a legal recognition and are treated as such. However, it will be submitted that the tenor of and challenges posed by corporate groups call for a clear recognition and stand of the legislator on the legal nature of corporate groups.