A parent company guarantee (PCG) is a guarantee by a

parent company A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ...

of a contractor’s performance under its

contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...

with its client, where the contractor is a

subsidiary A subsidiary, subsidiary company, or daughter company is a company (law), company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidia ...

of the parent company. It is mandatory for all the companies to mention about the guarantees granted as a note in their accounts because it is a risk for the company. The parent/holding company can refuse to renew the guarantee.

References

Contract clauses Contract law {{Business-term-stub