Parent company guarantee
Encyclopedia
A parent company guarantee (PCG) is a guarantee by a parent company
of a contractor
’s performance under its contract
with its client
, where the contractor is a subsidiary
of the parent company.
Parent company
A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company...
of a contractor
Independent contractor
An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when...
’s performance under its contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
with its client
Client
Client may refer to:* Customer, someone who purchases or hires something from someone else* Client , software that accesses a remote service on another computer* The client who received patronage in ancient Rome...
, where the contractor is a subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
of the parent company.