A company that owns or controls the majority of the outstanding voting stock or other equity in another company or otherwise has the right to control that company, also known as a parent. A parent company may be asked to guaranty actions of or transactions involving its subsidiaries if they do not have sufficient assets on their own.

For example, many bank loan financings are guarantied by a parent company along with some or all of the subsidiaries of the borrower. The guarantor agrees to pay the obligations of the borrower under the loan agreement if the borrower does not pay.

For more information on parent companies in the context of guaranties, see: