What is the name of a branch of a subsidiary. What does an employee of a subsidiary mean? Subsidiary reporting

When a company buys another company, the second company usually becomes a subsidiary. For example, Amazon owns many subsidiaries, including everything from Audible (recorded books) to Zappo (online shoe sales).

What is a subsidiary

A subsidiary is a company owned and controlled by another company. Own company called the parent company or sometimes the holding company.

The parent company of a subsidiary can be the sole owner or one of several owners.

If a parent company or holding company owns 100% of another company, that company is called a wholly owned subsidiary.

There is a difference between a parent company and a holding company in terms of operations. The holding company has no operations of its own; he owns a controlling interest and owns the assets of other companies (subsidiaries).

A parent company is simply a company that operates a business and owns another business - a subsidiary. The parent company has its own operations and the subsidiary can conduct the related business. For example, a subsidiary may own and manage the property assets of the parent company, withholding liability from these assets separately.

The corporation or S corporation is owned by the shareholders. In this case, the parent company usually owns 50% or more of the shares in the subsidiary.

An LLC is owned by members whose ownership interest is controlled by an operating agreement.

An LLC may own another LLC.

Why form a subsidiary

Subsidiaries are common in some industries, especially in real estate. A company that owns real estate and has multiple properties can form a common holding company, with each property being a subsidiary. The rationale for this is to protect the assets of various objects from each other's liabilities.

For example, if company A owns companies B, C, and D (each property), and company D is sued, the other companies are not affected.

How a subsidiary is formed

A subsidiary organization is formed by registration in the state in which the company operates. The ownership of the subsidiary is indicated at registration.

Suppose Company A wants to create a subsidiary to manage its properties. Subsidiary Company B is registered in the state and indicates that it is wholly owned by Company A.

How the subsidiary operates

The subsidiary company operates like a regular company, while the parent company has only supervision. If the parent company exercised day-to-day supervision of the subsidiary, this would mean that the parent took over the responsibility of the subsidiary.

Accounting and taxes for subsidiaries

From point of view accounting the subsidiary is a separate company, so it will keep its own financial statements, bank accounts, assets and liabilities. Any transactions between the parent company and the subsidiary must be registered.

Many companies represent consolidated financial statements(balance sheet and income statement) for shareholders, showing that the parent company and all subsidiaries are combined.

From a tax point of view, a subsidiary is a separate tax subject.

Each subsidiary has its own tax identification number and pays all of its taxes according to its type of business.

If the parent company owns 80% or more of the shares and voting rights for a subsidiary, it can file a consolidated tax return to take advantage of compensation for the profits of one subsidiary with losses from another. The subsidiary must agree to be included in this consolidated tax return.

Disadvantages of a subsidiary

LegalZoom notes that if the parent company is sued, it could go to the subsidiaries. “If the parent LLC has a claim or a court order on it, the assets of the subsidiaries may be at risk. Any action against the parent may legally go beyond the assets of the parent company, which in this case are the LLC itself. "

If company B is a subsidiary of company A and company B is sued, company A is still liable.

If it is a completely separate company, the responsibility remains separate.

One of the disadvantages of subsidiaries is that they are more complex from a tax, legal and accounting point of view. You will need both tax and accounting professionals to help you set up a branch and get down to the rules.

Subsidiary versus Partnership and Associate Member

A subsidiary is a company that is at least partially owned by the parent company. In the case of an associate, the parent company has a less controlling interest.

The term “partner” can be misleading. In the context of company ownership, a subsidiary is like an associate in which the parent company owns less than 50%.

But in the e-commerce world, partnerships are a contractual relationship between two separate companies to sell products or services. In this case, neither company has ownership or responsibility for the activities of another company.

What is the Difference Between a Subsidiary and a Database Administrator (Doing Business As)

A subsidiary company is a legal entity registered in the state. Doing Business As or Trade Name Status The DBA is not a legal entity; it is the name used by a business to trade with the public. For example, XYZ Company might do business as Jim's Auto Repair.

Denial of responsibility: Accounting and taxes for subsidiaries are complex and each situation is different. This is a very short general summary of accounting, legal, and tax for ancillary situations. Get an attorney, CPA, and tax professional to help you set up and run a subsidiary.

Deciding to expand, legal entities open subsidiaries. The activities of such organizations are regulated at the legislative level, so it is not difficult to understand their essence and characteristics. In short, a subsidiary is a kind of branch of a specific legal entity... The parent company, which is the founder of the subsidiary, is responsible for its activities, while the latter is in no way responsible for the work of the former. But first things first…

The essence and characteristics of subsidiaries

A subsidiary organization is any branch of a certain joint stock company... Its creation is usually due to the need to expand the parent company either in terms of the volume of work performed, or on a territorial basis. Less often, subsidiaries are created for other reasons, for example - carrying out certain manipulations (often illegal).

The process of creating a subsidiary company boils down to the fact that the parent or parent company allocates a certain part of its property to it and officially registers this procedure. As a result, a subsidiary company appears with its own founding Charter, composition and certain powers. All rights of the owner or a significant part of them in relation to the "daughters" are exercised by the parent enterprises, which is quite natural.

As noted earlier, the parent company is responsible for the activities of the subsidiary. However, in terms of activities, subsidiary organizations are recognized as separate, therefore, their management by parent companies is carried out through official representatives. The latter are necessarily selected by the board of directors of the parent organization, after which they are included in its composition.

The existence of subsidiaries boils down to the fact that:

Many subsidiaries

They are created through the allocation of property by some parent organization with clearly defined tasks.
They bear some dependence on the parent company and contact the supervisory authorities precisely through it.
They are managed by a representative of the mother organization, in other words, by an appointed director. He is appointed by the board of directors from the head office of the enterprise, but has no dependence on them. It is he who makes decisions on the activities of the branch entrusted to him, which is why he is considered partially isolated. Naturally, the directors of all subsidiaries listen to the advice of top management and practically do not conflict with it.

The isolation of subsidiaries is a difficult concept to parse. In the course of its activity, it is not difficult to trace isolation by making decisions on the part of the same director who can attract investors, determine the vector of the firm's activities and make other important decisions. However, the head office is usually responsible to supervisors or for the financial obligations of subsidiary companies. In principle, the isolation is partial and we will not consider subsidiaries in a different way. At the very least, this approach would be wrong.

Why do companies open subsidiaries

The main goal that organizations pursue when opening subsidiaries is the desire of its leaders to expand the scope of activities.

Opening in essence its own enterprises, a legal entity forms a kind of holding - a system of a large number of mutually contacting companies.

Naturally, with a competent approach, the opening of a large number of representative offices of the company entails an increase in its total income... Hardly anyone from the management team even small organizations would not like such a combination of circumstances.

In addition to generating additional profits and expanding the scope of activities, opening subsidiaries has a number of other advantages. The main ones are:

the ability to create a clearly debugged and problem-free management system
increasing the client base or obtaining other financial guarantees for the future
good chances for more successful coordination of the share price of shares and their quick implementation if necessary

Creation subsidiary- this is a perspective, so it is wrong to hope for an instant realization of all the advantages of its discovery. The entire value of such companies can be traced only with a competent approach to their introduction into competitive environment and with full support from parent firms. Opening subsidiaries in a different way may not only become useless, but also bring significant losses to a legal entity.

Note that the above reason for opening subsidiaries is the main one and is very common in practice. Our resource will purposefully not cover other goals of their opening, since in most cases they are of an unscrupulous nature.

For general information, it can be mentioned that the fictitious opening of subsidiaries can help offenders to receive a very real grant or other benefits from the state and third parties. Expanding an organization in violation of the laws of the Russian Federation is punishable. You should not forget about it, otherwise you will not be able to avoid responsibility before the law.

On the responsibility of parent organizations

It has been noted more than once that subsidiaries are partially separate. In most cases, they exist completely independently of the parent organizations and are endowed with own management, personal capital. In fact, the management of the parent company only gives advice and recommends a certain vector for the development of its subsidiary through senior representatives. Naturally, subsidiaries do not bear any responsibility for the legal entities that have opened them.

As for the responsibility of the "mothers", it can be traced more than significantly. Obligations of the parent company to the state or creditors for the activities of the subsidiary arise only when the latter cannot fulfill them on its own or has requested appropriate assistance from its grandparents.

Perhaps the main risks of parent organizations are associated with the financial activities of subsidiaries. In some cases, they are the ones who undertake to pay the debts and interest on them for their subsidiaries.

AFFILIATED UNDERTAKING- a unitary enterprise based on the right of economic management, created by another unitary enterprise based on the right of economic management, through reorganization in the form of separation (clause 7, article 114 of the Civil Code of the Russian Federation). D. p. can only be created ... ... Lawyer's Encyclopedia

AFFILIATED UNDERTAKING- 1) a legally independent enterprise, separated from the main (parent) enterprise and established by it through the transfer of part of its property. Often acts as a branch of the parent company that established it. Founder DP ... ... Encyclopedic Dictionary of Economics and Law

affiliated undertaking- a state or municipal unitary enterprise, created as a legal entity by another unitary enterprise based on the right of economic management, by transferring part of its property to it for economic management (clause 7 of Art ... Big Legal Dictionary

AFFILIATED UNDERTAKING- SUBS> Encyclopedia of Banking and Finance

Branches and subsidiaries: creation, management. Subsidiaries are.

Subsidiaries are business entities that are created and registered by parent organizations.

Definition of concepts

Subsidiaries are legal entities created by other (parent) organizations that endow them with certain powers and functions, and also provide their property for use. It is also worth noting that the parent firm draws up the articles of association and also appoints the management of the newly formed one.

Subsidiaries are one of the most common business expansion mechanisms. When deciding to scale up production or enter new markets, managers often resort to a similar mechanism.

Distinctive features

So, the management decided to create an accountable firm. Such a company is a subsidiary. It has a number of features that distinguish it from other organizations, namely:

conducting independent economic activities in accordance with the charter;
relative independence of the management in matters that relate to personnel and marketing policy;
significant distance from the parent company;
the ability to independently build relationships with government bodies, partners, competitors, suppliers, and customers.

What is a branch

A branch is an organization outside the parent company that has limited powers as well as responsibilities. It is worth noting that he is structural unit rather than a separate legal entity. The branch does not have the right to act on its own behalf, nor is it endowed with its own material resources.

Branches and subsidiaries

Subsidiaries and branches are often confused, although these concepts cannot be equated. The main difference between these organizations lies in their empowerment.

Subsidiaries are completely independent organizations. Despite the fact that they are fully accountable to the parent firms, their managers have full authority to make management decisions and also bear full responsibility for their actions. They are also characterized by the presence of their own charter. We can say that from the moment the charter is drawn up and the head is appointed, the subsidiary receives almost complete independence in relation to personnel and marketing policies, as well as other types of activities.

Speaking of the branch, it is worth noting that it is absolutely dependent on the head office. In fact, he is ruled by him. Such an organization does not have its own charter, which means that all issues regarding production, advertising and personnel are decided by the top management.

If we are talking about the global expansion of production, then it would be advisable to organize subsidiaries. In the case when the territorial spread is small, it is worth giving preference to branches.

Creation of subsidiaries

In order to open a subsidiary, you need to go through the following procedures:

it is necessary to draw up the charter of the new organization, as well as clearly distribute the shares of capital between the owners;
the director of the parent company signs a document, which indicates the clear coordinates and contacts of the subsidiary;

Absorption

It is possible to create a subsidiary not only from scratch, but also by absorbing other organizations (by mutual agreement, on account of debts or in other ways). In this case, the procedure will look like this:

for a start, it is worth deciding whether the production of the enterprise will be reoriented to the standards of the parent or will remain in the same direction;
the next stage is the development of statutory documents;
you should find out the validity of the previous details of the enterprise or assign new ones to it;
then the director (or manager) is appointed, as well as the chief accountant, on whom the responsibility for the management of the subsidiary is subsequently shifted;
then it is necessary to apply to the tax and registration authorities with a corresponding application for registration of a new enterprise;
after the registration certificate is received, the subsidiary can operate in full.

How is control carried out

Control over the activities of subsidiaries can be carried out in the following ways:

monitoring - implies continuous study and analysis of information contained in the reporting documents of the subsidiary;
periodic mandatory reports from directors of subsidiaries to senior management on performance;
collection and analysis of performance indicators of the enterprise through the efforts of employees of the internal control department;
engaging third-party auditors to study the state of affairs and financial flows in the subsidiary;
periodic audits with the participation of the controlling bodies of the parent company;
also a rather important aspect is the inspections of state control bodies.

Benefits of subsidiaries

A company is a subsidiary if it can be characterized as a relatively independent entity that is accountable to the parent company. This form has a number of undeniable advantages:

bankruptcy of a subsidiary is practically impossible, since the main organization bears responsibility for all debt obligations (an exception can be considered the case when the main company itself suffers serious losses);
all responsibility for drawing up the budget of the subsidiary, as well as covering its expenses, is assumed by the head office;
the subsidiary can enjoy the reputation as well as the marketing attributes of the parent.

It should be noted that the declared advantages relate specifically to the governing bodies of the subsidiaries.

Disadvantages of subsidiaries

We can talk about the following shortcomings of "daughters":

Since the product range and production technology are clearly dictated by the parent organization, the management of the subsidiary will have to forget about the ambitions for innovation, rationalization, and scale up;
the managers of the subsidiary cannot freely dispose of the capital, since the directions of its use are clearly outlined by the top management;
there is a risk of closing the enterprise in the event of the bankruptcy of the parent company or the ruin of other subsidiaries.

How is it managed

The subsidiaries are managed by a director who is appointed directly by the senior management of the parent company. Despite the provision of rather broad powers, one cannot speak of complete independence, since the “daughter” is a structural unit of the parent company. At the beginning of the reporting period, the manager is "descended from above" the budget, the implementation of which he will have to report later. In addition, the "daughter" operates in accordance with the charter, which is drawn up in the head office. Also, senior management monitors the implementation of all legislative and legal regulations.

What is the responsibility of the parent organization

According to regulatory documents, the subsidiary is a separate legal entity. Moreover, it has its own own capital, which makes it possible to independently bear responsibility for their debt obligations. Therefore, we can say that the "daughter" and the parent company have nothing to do with each other's debts.

Nevertheless, the legislation identifies several cases that lead to the emergence of liability on the part of the parent organization, namely:

If the "daughter" has entered into a certain transaction at the direction or with the participation of the parent company. If this fact is documented, then both entities are liable for debt obligations. In case of insolvency of the subsidiary, the entire cargo is transferred to the parent organization.
The bankruptcy of a subsidiary can also lead to liability on the part of the parent company. In this case, insolvency should occur precisely as a result of the execution of orders or instructions of the second. If the property of the subsidiary is insufficient to cover all debts, then the parent company takes over the obligations for the remaining share.

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Despite the fact that the subsidiary has a fairly high level of freedom and broad powers, its financing is carried out by the parent organization, which also determines the direction production activities... Also, despite the relative independence of the subsidiary, the head office constantly monitors its financial and marketing activities.

Not sure what a subsidiary is? Let's consider its main features, advantages and disadvantages, as well as the order of creation.

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Here are the data that are spelled out in the legislation of Russia in 2020. When opening a branch or subsidiary, the founders must take into account all the differences.

While many have at least somehow heard about branches, few people know about a subsidiary. We will determine whether it is worth giving preference to a subsidiary company, having considered all the nuances of work and discovery.

Important aspects

Almost all large organizations were created spontaneously - some firms were bought and others were sold. But when the assets were already determined, a spontaneous restructuring began, which exists in our time.

Therefore, the question still remains - to prefer branches or a network of subsidiaries when expanding a business. There is no single answer.

The decision should be made at the head office, which will take into account the strategic goals, type of activity. Usually branches are opened by companies that have one line of business. Most prefer to create subsidiaries.

Basic moments

The company has the right to have a subsidiary and dependent economical society that the legal entity will have the right.

They should be created in accordance with the requirements of the law of Russia, and in the case of creation outside the country and the laws of the corresponding state, unless other norms are established.

A company becomes dependent if the company has more than 20% of its authorized capital.

Advantages and disadvantages

Let's note the positive points:

Disadvantages of such an enterprise:

No freedom of action	Since you have to fulfill the tasks set by the parent company. Subsidiary company produces what is imposed on it
There is no way to control deliveries	Manufacturing and finance. And this complicates technical development
All funds are managed by the parent company	And therefore it is difficult to invest in a subsidiary. The parent company provides some funds that are fully allocated
If the parent community has several subsidiaries	Then when they go bankrupt, he has to compensate for losses. And the funds are allocated from the income of another subsidiary. In case of severe bankruptcy, the subsidiary will also have to be closed. Only a sponsor or another company can correct the situation.

Legal grounds

When creating a subsidiary, the provisions should be taken into account.

The rules for opening a branch were also considered in that was adopted by the government on December 26, 1995.

You should also be guided by individual provisions.

What does a subsidiary mean

A subsidiary is a branch of a large joint stock company. It is created if there is a need to expand the activities of the main enterprise.

Such a company is managed by the parent company, since it was originally created with the money of such a company. The subsidiary must be subordinate to the parent community.

The parent company bears for the subsidiary to government agencies, it is under its control.

A subsidiary company (as a legal entity) is created by other companies, transferring part of their property to it for economic management.

The founders must approve, determine who will be the head, and exercise other rights of the business owner in accordance with the law.

The structure of the subsidiary is the same as the structure of the parent company. If several subsidiaries are created, a holding is formed.

In order to exercise control over the subsidiaries, the parent company may have a controlling stake. She also has the right to conclude agreements or indicate in the charter, prescribing the conditions for agreeing on a development strategy.

What's the difference with a branch

A subsidiary and a branch are not exactly the same thing. The difference is the autonomy of the structure of the subsidiary company from the parent company, but at the same time the presence of an inextricable connection with it.

This allows you to redefine other differences between subsidiary and branch.

The parent company, which heads the subsidiary, has the right to create branches in one territorial district, and subsidiaries in another. In this case, all structures can have one goal.

Therefore, in practice, the activities of a branch and a subsidiary have similarities. They only have distinctive statuses on legal grounds.

The branch is an independent unit, but has a limited one. It is placed outside the location of the main organization.

It is not a separate legal entity, and does not have its own property. Managers are appointed at the head office and can only act on the basis of a power of attorney.

Video: Establishment of a subsidiary company Ethtrade. Main news from the conference in Sochi

A subsidiary company is an independent legal entity. It is created according to the same rules as LLC. She has her property authorized capital, and also bears responsibility for its own activities.

The firm is free to act on its own behalf, while the branch acts on behalf of the parent organization.

Opening order

In our time, create societies with limited liability much easier. First you need to collect and issue the necessary certificates.

You will need:

the charter of a subsidiary;
parent organization documentation;
the decision to create a subsidiary;
statement ;
a certificate confirming that the company has no debts.

There are 2 options for creating a subsidiary. The first option is as follows. First, the charter of the subsidiary is drawn up, reflecting all the necessary conditions.

If the firm has several founders, then an agreement on the distribution of shares is written. This is followed by the preparation of the protocol by the founders.

This document will confirm the establishment of a subsidiary company. When creating a company, the founders must indicate its location and contacts.

Responsibility of the parent organization

A subsidiary is usually independent and has personal capital and property. She is not responsible for the debts of the parent organization, and parent company also not held liable for the debts of the subsidiary.

But the controlling entity should be responsible for the debt and risks of the subsidiary only in such situations:

In the first situation, one of the debtors must pay off the creditors for all obligations, and then the rest are not liable for the debts.

In the second situation, the parent company must pay off the debt of the subsidiary, which it is not able to pay off from its property itself.

The parent company also creates a subsidiary organization to allocate company resources and highlight the most promising areas of specialization.

Therefore, the competitiveness of the entire enterprise increases. The subsidiary can fulfill routine obligations, and due to this, the management of the entire company can be optimized.

With transfer prices and transactions, the amount of tax and financial losses and costs is reduced.

There are many cases when an enterprise has developed to such an extent that it needs to either expand or, conversely, increase its profits. And most often the management of such an enterprise stops at the option of creating one or more subsidiaries.

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Subsidiary- a legal entity created by another enterprise or founder with the transfer of a share of his property fund to him. The founder of the created enterprise approves its charter, appoints the head. In addition, the founder has many other owner rights provided for current legislation in relation to a subsidiary.

The main purpose of creating subsidiaries- This is the distribution of internal resources of the organization and the allocation of the most promising areas in separate specialized firms. Thus, the competitiveness of the entire company as a whole increases. In addition, the subsidiary is often engaged in extremely tedious routine work, and transfer prices and transactions can reduce financial and tax costs.

If a subsidiary company is established abroad, then this allows the development of foreign economic activity of the entire company mainly due to customs and tax benefits. When several subsidiaries are created, a holding is formed, and each so-called “daughter” has the right to independently choose the tax regime for itself, conclude contracts and much more.

Benefits of opening

At first, the creation of a subsidiary is an ideal option for development foreign economic activity... Therefore, the creation of a subsidiary in the offshore zone will allow you to save money with the help of tax incentives when concluding transactions with foreign counterparties.
Secondly, the creation of a subsidiary will increase the stability of the parent company. All risky operations can be transferred to its activities and the main company does not bear any responsibility for them.
Thirdly"Daughter" can be entrusted to carry out daily routine work or assign certain functions for the implementation of a specific project.
Fourth, the subsidiary creates competition due to the narrow special focus of the company.
Fifth the subsidiary will provide an opportunity to increase financial flows, investments and much more.

How to open?

In order to open a subsidiary company, you must:

Choose in which direction the "daughter" will work.
Draw up the charter of such a company, indicating all the important conditions. In the event that there are several founders, then you should draw up memorandum of association, in which it is necessary to pay attention to the paragraph on the distribution of shares between each of them.
Draw up the minutes of the meeting of founders on the creation of a subsidiary company. In this case, the minutes must be signed by the chairman of the meeting, the secretary of the founding council, or only one founder.
Assign a legal address to the company. The director of the main company draws up a document about this.
A legal entity should be registered. In addition, the company must have its own current account, seal, details.
Determine and appoint the chief accountant, director of the subsidiary. In order to fix the transfer of a share of finance from the head company, an appropriate act must be drawn up and signed by the directors of both companies and the chief accountant.
The main enterprise should not be burdened with budgetary debts, including tax. In confirmation of the absence of such debt in the registration chamber, a letter should be requested, which indicates that the company has no debts.

It is also necessary to draw up a statement in the form p11001 with the obligatory indication:

organizational and legal form;
data about;
legal address;
the name of the subsidiary;
information about the founders and the sole executive body;

Fully completed form with the required documents, as well as a certificate of state registration the main company and copies of the passports of the chief accountant and director of the subsidiary company, to submit to the territorial tax office. Having passed the registration, the subsidiary company can carry out its activities in full.

Comparison with branch and representative office

Branch Is an independent subdivision of a specific limited liability company. It must be located outside the location of the main company.

The branch is not a separate legal entity, it performs the functions of the main company or part of them. In addition, such a division operates solely on the basis of approved regulations.

The branch has no property of its own. The head of the unit is appointed and removed from office by the main enterprise and acts only by power of attorney.

It does not act independently, but on behalf of the company, and it, in turn, is responsible for the actions of the branch. The charter of the enterprise contains all the data on the existing branches.

Representative office as well as branch Is a subdivision of a limited liability company that is not located on the territory of the company. Unlike a branch, it performs the function of representing and protecting the interests of society. Otherwise, everything is the same with the branch.

The main differences between a subsidiary and a branch and a representative office:

The subsidiary is a separate legal entity. It is created like any ordinary limited liability company. It has its own authorized capital, it acts on the basis of the charter, bears responsibility independently.
A subsidiary can be engaged in any activity, which is spelled out in the charter. The branch operates in the same directions as the company, and the representative office is created with the aim of representing and protecting the interests of the company.
Subsidiary acts only on its own behalf, and a branch and a representative office from the main enterprise.

Opening a subsidiary is much more profitable than opening a branch or representative office. It is independent in making any decisions, it is responsible for its obligations independently, and in the case of actions on the orders of the main company, it bears joint responsibility with it.

Influence of the parent firm on the subsidiary

The parent firm is not required to hold a controlling interest to control a subsidiary. They can act on a contractual or statutory basis. For example, one firm may transfer to another firm the rights to apply any production technologies in the manufacture of a product, and the contract specifies that the subsidiary is obliged to coordinate the sale of the product with the controlling company.

Responsibility of the parent company

The created subsidiary is an independent entity. She has her own capital, as well as property. It does not bear any responsibility for the resulting debts of the parent organization, and the parent company is not responsible for the debts of the subsidiary.

But the legislation provides for two cases of liability of the parent company for the debts and claims of the subsidiary:

In the event of a transaction involving a subsidiary at the direction of the parent organization. Moreover, such an order must be documented. In this case, both subjects bear in relation to common obligations. That is, in the event of adverse consequences, any of the firms is obliged to pay off the arisen debt to creditors.
If the subsidiary becomes bankrupt as a result of administrative actions of the main enterprise. In such a situation, subsidiary liability arises. This means that if the subsidiary does not have enough resources to pay off the debt, the parent company pays the rest.

And now all of the above can be seen with an example. Suppose that there is a certain company "Crystal", which is located in the city of Yakutsk. She became quite successful and at general meeting the founders decided to expand the company.

The question of whether to open a subsidiary or branch network? Often they stop at a subsidiary company, since the branch requires constant control from the parent company. In a subsidiary, you just need to appoint a director and he himself will lead and be responsible for all the actions of the company. The result is an independent company. And the parent company only needs to send financial statements and agree on some costs.

Usually, when a subsidiary is opened, a change is made to the name of the parent company. So, the Kristall company opens a subsidiary in Moscow. The name of the subsidiary will be with the addition of a few letters, for example, DK Kristall.

The main company relieves itself of control and guidance by the firm's current documentation. The head of the subsidiary is responsible to the management of the parent company. This expands the competitiveness and profitability of the parent company, but at the same time makes life easier for oneself in managing the subsidiary.

Sooner or later, every entrepreneur, as well as a founder, has a question: to open a subsidiary or not? What is the difference between a subsidiary, a branch and a representative office? Does the parent organization actually receive significant benefits when opening an accountable organization? Let's take a closer look at these legal issues.

The parent company is ...

A parent company is a founder who owns a controlling stake in a subsidiary (50% or more). In other words, it is the main economic society.

Here are some of the powers of the "mother":

Has the right to carry out certain operations and participate in the production of certain goods of the subordinate firm.
Implements organizational and economic management principles.
Develops specific goals, controls the direction and development of both the company and its divisions.
She is responsible for the distribution of profits.
This company controls not only its financial planes, but also their use in divisions.
Decides to liquidate or reorganize a subsidiary.

In order to improve the efficiency of the subsidiary company, the founder may conduct. This analysis identifies strengths and weaknesses. financial activities business.

A subsidiary is ...

A subsidiary is a branch of a large corporation with its own shares. When an established company is gaining momentum, it becomes necessary to create subsidiaries. Since investments in a subsidiary are made by the main organization, it also controls it in accordance with the concluded agreement. Most of the decisions made by the "daughter" come into force only after agreement with the mother center.

The parent company is fully responsible for the subsidiary to the regulatory authorities of the state. Registration of a “daughter” is mandatory in the manner prescribed by legislative acts. Successful interaction between "mother" and "daughter" is possible only if the subordination at work.

A subsidiary is a separate legal entity. In fact, it is engaged in independent economic activities... Human resources and marketing strategy v this enterprise is taken over by the leader. The parent center compiles a set of rules governing the work procedure. But, according to the Charter, for decisions taken the daughter is responsible. Well, capital management is the responsibility of the main organization.

Pros and cons of a subsidiary

TO strengths"Daughters" include the following features:

A subsidiary cannot be declared bankrupt, because all responsibility for financial management rests with the parent company.
The marketing strategy for subsidiaries is developed by its founder. This means that he is the guarantor of product quality. The situation makes it possible to use the reputation of the main company, which has been developed over a long period of time, its symbols, etc.
A subsidiary company does not need to worry about calculations and budgeting, because the parent company is engaged in accounting.
The parent organization is fully responsible for the subsidiary's expenses and pays its debts.

The main disadvantages in organizational and legal relations that characterize the subsidiary:

The deprivation of the possibility of self-development and the introduction of rational proposals for more extensive activities, and as a result - dependence on the parent company. For example, when considering, a subcompany must take into account the opinion of the principal.
Restriction in the use and distribution of fixed capital, since this is done by the management of the main company according to a clearly defined plan.
Influence in the case of bankruptcy of the "mother" or branches dependent on her on the "daughter" up to the termination of the activity of the latter with the withdrawal of her funds to pay off debts.

Features of opening a subsidiary

Why are such companies formed and what is required to open them? Here are the main goals:

"Subsidiaries" are often created for use by large corporations when various problems in the course of their activities. This is an opportunity to start a business with " blank slate”Without taking into account past debts. The additionally created organization can become useful in improving the administration system and getting rid of routine work.
The subsidiary company helps to resolve issues with the selection of personnel and to participate in the fight against competitors. The holding gains an advantage in the market with the opening of a larger number of subsidiaries.
The "daughters" are also very helpful in the development of foreign economic activity. The conclusion of transactions with foreign counterparties will play into the hands (savings are achieved thanks to tax incentives). In many ways, the prosperity of a business depends on the ability to properly organize. New contacts and connections (including abroad) - additional opportunities and results.
The creation of a subsidiary increases the stability of the parent company. This, in turn, provides an excellent chance to increase financial flows and investments, rational use of assets and resources.
Sometimes a strategy is used in parallel with the opening of a subsidiary. This is an opportunity to take up a new activity and reduce risks.

To achieve the above goals, the subsidiaries have the following tasks:

Improving the quality, and as a result, the competitiveness of the products or services provided.
Involvement of specialists in management bodies.
Minimization of cooperation with the parent organization.

When opening a subsidiary company, you will need:

The documents of the ruling and the Charter of subsidiaries.
A legally certified decision on the P11001 petition to establish a subsidiary.

Important: documentary evidence of what is missing indicates the solvency of the founder.

Responsibility of the parent organization

At the legislative level, three cases of liability were previously provided:

When the relationship between parent and subsidiary companies was proven.
If the parent organization obliged the subsidiary to participate in the transaction. This indication had to be documented. In this case, both entities are subsidiary liable to common obligations, which means that in the event of adverse consequences, any of the firms is obliged to pay off the debt to creditors.
If, as a result of the order of the parent company, the subsidiary incurred losses and turned out to be bankrupt. In this case, subsidiary liability also applies. The parent company must pay off part of the debt of the subsidiary.

Thanks to the innovations in the Civil Code of the Russian Federation, the rule of bringing the main company to responsibility for the debt obligations of the subsidiary has been simplified. That is, there is no need to prove the right of the parent company to indicate the subsidiary in the Charter of the latter or in the agreement between these two organizations.

How does a subsidiary differ from a branch and a representative office?

Branch- This is a subdivision of a legal entity that is located outside its territory and performs most of its purposes, including the function of representation. It is included in a single State Register, and in its activities uses the property of the parent company and operates on the basis of its provisions. The legal entity appoints branch managers who perform their duties in accordance with the power of attorney provided.

Representation is a separate subdivision of a legal entity that does not have legal status... Its function is to represent the interests of society and to protect them. The principle of operation is in many ways similar to that of a branch: all actions are performed with the consent of a legal entity, this also applies to the appointment of managers.

Distinctive features of subsidiaries:

The parent company exercises relative control over the subsidiary, grants it legal autonomy and thus influences decision-making. In contrast, the dependent company does not have the right to make any decisions at all without discussion with the parent organization.
A subsidiary has the status of a legal entity, which is not typical for branches and representative offices. It means that similar company can be located on the territory of the main one, which is excluded for branches.
A subsidiary company can be in any organizational and legal form.

Thus, subsidiaries are more independent structural units, since they have more rights and powers, and also own property as property. Branches and representative offices have more limited business opportunities.

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In general, opening a subsidiary has a number of advantages, but, on the other hand, imposes legal liability. With a properly drawn up business plan, a subsidiary can significantly increase the company's revenues and reduce risks. This expansion of activity is quite an interesting phenomenon that deserves close attention.

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