When the affiliate enterprise regulations of Taiwan's Company Act were first enacted, the liability law of Germany's Aktiengesetz, Articles 311 and 317 (similar to the compensation and damage liability of the controlling company in Taiwan's Company Act, Article 369-4) was referenced. If the application of controlling company liability standards in Taiwan's Company Act, Article 369-4 is to be discussed, the source of these standards (i.e., the German legal system) must be understood. In addition, Taiwan's Company Act, Article 8, Paragraph 3 was amended on January 4, 2012, to include a provision whereby a de facto or shadow director ”shall be liable for the civil, criminal and administrative liabilities as a director in this Act.” Article 154, Paragraph 2 was amended on January 30, 2013, to ”if a shareholder abuses the company's status as a legal entity [...] the shareholder shall, if necessary, be liable for the debts.” To understand whether the addition of the above described responsibilities affects the application of an affiliate enterprise's controlling company liability standards, the positioning of controlling company compensation and damage liability in Taiwan's Company Act, Article 369-4 must first be investigated. To achieve this objective, this study established a theoretical basis for analysis and judgment based on the German legal system's controlling enterprise compensation and liability laws. Consequently, the researcher investigated the de facto affiliate enterprise-related controlling enterprise liability legislation in German law, endeavoring to clarify the positioning of Taiwan's affiliate enterprise-related controlling company liability standards and their relationship with the other liability standards in the Company Act.The present study explored why affiliate enterprise standards are necessary, and the overall framework of affiliate enterprise standards in German law, to understand the arrangement of affiliate enterprise-related controlling enterprise liability legislation in German law. The researcher then further discussed and analyzed the legislation standards regarding compensation and damage liability in Aktiengesetz, Articles 311 and 317. This included the judgment timeframe and methods when the controlling enterprise causes its subsidiary company to conduct unprofitable business or business that is contrary to normal business practices; the nature of compensation; the division and scope of compensation and damage liability; whether it is necessary that the harmful influences of the controlling enterprise proceed from intent; the allocation of the burden of proof; and the premises for derivative suits regarding the subsidiary company's creditors. Subsequently, the reason the compensation and damage liability laws in Aktiengesetz are not appropriate for controlling enterprises with subsidiary companies that are ”the limited company” was explored, as well as liability standards for the controlling enterprises of a limited company. Because the mentioned liability standards were inadequate in protecting the subsidiary company and its minority shareholders and creditors, the German practice has developed additional accountability mechanisms for circumstances in which subsidiary companies are highly and harmfully infringed upon by the controlling enterprise. This is the primary focus of this study's investigation.This study determined the positioning of the compensation and damage liability of the controlling company in Taiwan's Company Act, Article 369-4 by analyzing Germany's controlling enterprise liability law. If the controlling company has caused its subsidiary company to be placed under harmful management, and the controlling company pays an appropriate compensation within the compensation period, the liabilities of the de facto and shadow director (Article 8, Paragraph 3) or the personal liabilities of the shareholders for the company's debts (Article 154, Paragraph 2) cannot occur. However, if the controlling company fails to pay an appropriate compensation, and, thus, causes the subsidiary company to suffer damages, the controlling company is liable for damages. In addition, under this situation the controlling company may also engender the liabilities of the de facto and shadow director or the personal liabilities of the shareholders (piercing the corporate veil).