North Bank has lent Sophie Limited $600 000. Part of the loan contract prevents Sophie from borrowing money in the future from other banks without the permission of North. As a result of this relationship:

Question

Quizplus · Accepted Answer

The loan contract between North Bank and Sophie Limited does not establish a parent-subsidiary relationship between the two parties. Although Sophie Limited has agreed to certain restrictions in relation to borrowing funds from other banks, this does not give North Bank the power to direct the activities of Sophie Limited or exercise control over its decision making. Therefore, the relationship between the two parties is that of lender and borrower, rather than parent and subsidiary.

North Bank Has Lent Sophie Limited $600 000