Subsidiary Liability of Legal Entity Controllers in the Context of Corporate Transformation in the 21st Century

The article examines the subsidiary liability of corporate controllers in the context of the evolving nature of corporations in the 21st century, with a particular focus on the development of legislative approaches to creditor protection and the stability of corporate governance. The author analyses the concept of "piercing the corporate veil" and its adaptation to Ukrainian legal realities, specifically in the context of delineating controller liability in cases of rights abuse, inadequate performance of duties, or disregard for a company’s economic sustainability. The study explores the unique characteristics and distinctions of the Ukrainian approach compared to the legal frameworks of the Anglo-American tradition and German corporate law, where controllers’ subsidiary liability is often based on principles of shareholder solidarity and adequate capitalisation doctrines. Special attention is given to doctrinal approaches to subsidiary liability, the legal nature of corporate capital, and issues surrounding the application of personal liability to controllers, including the role of operational decisions and managerial abuses in the formation of debt obligations. The article underscores the critical role of controllers in preventing insolvency through effective asset management and financial planning responsibility, and it identifies existing legal mechanisms that limit their liability for company debts. In conclusion, recommendations are provided for improving the Ukrainian legislative framework, taking international experience into account, particularly in aspects related to preventing risky transactions and establishing clearer criteria for holding controllers subsidiarily liable in cases of corporate insolvency. Keywords: subsidiary liability, corporate controllers, piercing the corporate veil, corporate governance, creditor protection, Ukrainian corporate law, Anglo-American corporate law, German corporate law, controller liability, insolvency prevention, capital adequacy, legal nature of capital, managerial accountability, risk management