Subsidiary: A Complete Overview

Is a separate law firm with the full rights and obligations of a subsidiary. Explain further how a subsidiary works and what makes it different from the branch. Read more to learn about subsidiary company registration

What is a subsidiary?

A full-fledged law firm is a subsidiary of the rights and obligations inherent in the chosen institutional form. Vs. Economic activity is guided by constitutional documents and settlement accounts in banks.

Download and work :

What will help: There is an understandable process for verifying the instructional management statement, a comprehensive analysis of each indicator by the financial position companies.

What will help: To establish links between the financial services of the management company and the subsidiaries. It integrates the types of data provided for reports and budgets.

What will help: This position outlines the basic principles and methods for formulating and approving the budget of group subsidiaries. Particular attention is paid to the procedure for making changes to approved projects. The use of this document in practice will help to accept the interests of all participants in the budget process.

Differs from the branch than “daughter”

The branch, in contrast to the subsidiary, completely loses self-determination, which is considered only a separate division of the company. His activities are governed by the provision of a branch office, which authorizes the head office.

Desk . Comparison: Branch and subsidiary

Branch Subsidiary
To create a branch, it is not necessary to create authorized capital. The degree of autonomy establishes the head unit. Simplified financial calculations between head company and branch.
The law does not allow companies to set up branches in a simple tax system. The head unit is responsible for branch office operations.
Unlike a subsidiary, a branch is less functional. If you plan to share a business, it makes no sense to create a branch
A subsidiary is an independent law firm that carries all the risks associated with its own operations. The law does not reduce the process of creating a “daughter”.
A subsidiary may carry out legal proceedings without restrictions.
To set up a subsidiary, you will need more documents to register and pay the share capital you need .
Company Center Difficulties with the manager of a subsidiary. If a business license is obtained, the “daughter” must re-enforce a license

 

“Daughter” or Branch: Convenient and cheap for the company

From your decision, whether to open a subsidiary or an adequate branch or a separate division, the tax effects and the security of the property and the security of the assets come into the tax. We set the criteria for how easy it is to determine what to choose.

How to install a sub

Key company required to register “My Daughter”:

  1. Minutes of meeting of founders at meeting of directors to create legal documents. Note for registration (five working days);
  2. Obtaining a letter of information to conclude a contract of units or to confirm the address of the unit location (five working days);
  3. Registration of law firms in the financial and statistical bodies at the location of the subsidiary (five working days);
  4. A mold of a newly formed company (one working day);
  5. Regular queue to open a bank account (three working days).

How to finance a subsidiary?

A company can finance its subsidiary at the expense of its subsidiary and bank loans.

This is possible in the following ways:

  • Contribute to authorized capital in cash or property;
  • Pass the required funding as a priority for future work (services);
  • Delivery of goods to enable a significant delay in payment;
  • Give credit.

In order to attract debt, it is important to keep in mind that a subsidiary of society is often unprofitable at the beginning of its operations. The bank can refuse the tools or offer them as a guarantee to another profitable company of the company. “Daughters” can raise a positive capital, but it is an expensive and lengthy process, requiring the same complete frame design. In addition, many company owners deliberately have low identities of authorized capital, thus minimizing the risks of losses.

All settlement activities between the group’s subsidiaries are provided only by economic agreements, in which case they may be the basis for the listing of money or property transfer.

How to manage and control a subsidiary

Guide to subsidiary CEO. This is one of its associations. Additionally, in a subsidiary, you can create your own management body, such as a board or board of directors. Since all operational activities are managed by their own management, strategic decisions are accepted by the owners – which gives a subsidiary more autonomy. Based on routine monitoring of current control activity and implementation of approved targets for identified deviations. It is the optimal option to allow a party to control the staff of a party executive officers, on the other hand, the “daughter” must respond to a dynamic situation.

How to remove a subsidiary

The liquidation of a subsidiary is a complex and lengthy process that involves all the planned procedures in the matter: obtaining owners’ decision or court decision, formation of liquidation commission, formation of negative notice, settlement of loans, dismissal of employees, etc. It requires additional financial costs. The removal of the “daughter” is considered complete, and the law firm – has just ceased to exist

If we say so simple language the result is, not exactly, from a legal point of view, that a subsidiary is a division of any company in your city. I think the head office is located in Moscow. In Krasnodar, he will open his branch, which is a subsidiary.

You can be concise and definitely official.

Subsidiary – A company created by another company (founder) as a legal entity (founder) by transferring a portion of his assets over the entire economic management. The founder of the subsidiary establishes the law of the company, appoints its chairman and grants the other rights of the owner with respect to the subsidiary provided by the legal acts of the subsidiary.

Not so detailed and simple now. I volunteered to consider the example. I think a company which is located in Vorkuta is “almaz”. As far as the company is involved, it can open its subsidiary in any city of the country (except for those cases provided to NK and others).

It is our company “Almas” that is developing successfully, and the general meeting of companies decided that it is time to expand, the founder of this company (although the founder may be a single person). What to choose? Open a branch network or subsidiary? Often, in such cases, they end up opening a subsidiary, not branches. Branches do not have their own charter, in principle, fully accounted for in a head office to follow his work. At the same time, the subsidiary is its charter, and the head office is appointed as the head of a subsidiary. In essence, the head of the subsidiary is responsible for all activities performed in the department. It leads to all activities, promotion, working organization, well, Eventually the workers hired themselves. It will replace this kind of individual company. The head is only there to consolidate major expenses. Head offices, exchange important statements with him. Current issues and reports, manages a subsidiary independently.

In half the cases, a subsidiary opens and introduces companies that add to the company name. Let’s touch on our example. Alsa, based in Worcester, has decided to open a subsidiary in St. Petersburg. For example, the name of this subsidiary, szdp “almaz”, can be read as Almas Northeast subsidiary. OK, or sz “diamond”. Large set of variations.

However, a change of title is not necessary in the case of opening a subsidiary. It depends on the charter adopted by him.

By opening a subsidiary, the company frees itself from the obligations that lead to the adherence to the teaching documents in it. The company only receives major reports, which makes it clear that it is working with other areas. Most are responsible for the work of the department and are the appointed head of the subsidiary. Thus, the leaders of these subsidiaries are more aggressive and efficient than the branch leaders. After all, the head of the subsidiary actually serves himself and has almost full legal responsibility. Naturally, he earns, rather than branch leader.

Big companies are exposing new companies to expand the business. They are called “grants”. Such a company creates their own funds. It is responsible for their work before the state controls the government. Accordingly, the management of the subsidiaries is carried out from the head organization. At the same time, such companies are not responsible for the work of the principal corporation. LLC LLC

General

A subsidiary is a law firm. It must be recorded in a manner determined by legal action. The formation of a new company is carried out by converting part of the assets to economic management. Recognizes the head of the major corporation company who spoke as a founder, enforces the rights of the owner, the rights established by the relevant regulatory acts.

Specific

A subsidiary is an organization established in the head office. The difference between them is that the main company has more rights and advantages. However, he has more responsibility. One of the advantages of the head office is that it can accept management decisions regarding the entire operations of the open company. It is believed to have 3% of its shares for its full share in its operations. However, in practice, this indicator rises by 5%. Of course, controlling shares (greater than 50%) offers many benefits to the core company. In essence, a sub is a separate entity. The activity is controlled not only by the main company but also by the state. All financial activities are brought to the attention of the supervisory authorities.

Guide

The main organization sends its employees to open companies . The head of the representative office receives a seat on the board of directors. For example, Cospram’s subsidiaries work for such a policy. Head office staff can make orders, make recommendations about business promotion and throughout the activities of the organization as a whole. However, the right to make the final decision rests with the heads of the subsidiary.

Recovery of losses

In some cases, the company formed due to the illiterate policies of the major corporation begins to lose profits. In such circumstances, the owners are entitled to a refund from the parent company. Similarly, opponents come in the event of the bankruptcy of the open system.

Abilities

A subsidiary is an all business expansion tool. Due to the network of such organizations, the leading company can significantly strengthen its position in the market. A large holder undoubtedly weighs more than a company. An example of this might be the subsidiaries of Cospram. One of the key tasks of such organizations is to identify potential competitors in the market. A representation of some large holding is often left to the single companies when it appears as a representation. In addition, a subsidiary may be formed to capture new market segments. To maximize capital inflows, the company needs to look for new, more promising sites.

Benefits

In front of big companies, various problems can arise in their work. To solve some of them, the company can create a subsidiary. Often companies need to improve the management system and free you from routine activities. Implementing this task may contribute to the formation of a new organization. At the expense of a subsidiary, important issues, such as staff selection, are overridden by competitors. Such systems have greater advantages in the market.

Subsidiary and maternity company

The situation is more normal when the organization created by the main corporation becomes an independent entity with separate property and its own capital. Accordingly, it does not respond to the parent company’s debts, nor does it hold key holders liable for subsidies. In the meantime, lawsuits are still being filed in which lawsuits can be addressed to the parent company. The parent company is responsible for:

  • The decision of the transaction was held at its disposal (this fact must be confirmed by the document);
  • A subsidiary executes the orders of the parent organization and is recognized as bankrupt (insolvent).

In the first case, the calculation of duties is fully implemented. In the second scenario, the parent company only relieves part of the debt that the subsidiary cannot pay.

Difference from branch

First, the subsidiary has legal autonomy. The branch is fully attached to the head office. This fact advanced other differences. The main corporation opens one subsidiary in one region and another, a branch. Both companies will have one goal. In this regard, in practice, much of the work of branches and subsidiaries is not much different. The discrepancy between these organizations can only be in legal indications.

Creation Features

Before opening a subsidiary, one must create an arrangement in its operations. Based on this document, a new system will work. In addition, changes must be made to the charter of the main corporation. The Registration Authority should send applications for the established forms. The education of a subsidiary should be discussed at the general meeting. This question should be included in the protocol. Set of documents, make a decision to create a new system.

During the discussion, the future president of the company decides. The prepared set of documents is assigned to the notary and sent to the registering authority. A subsidiary record is considered a subsidiary at the time of proper entry into a single registry. Institutional affairs after settlement . The subsidiary must present to the law firm a complete set of established documents. Companies must be registered with the tax inspector.

As the business grows, companies expand the areas of their operations and the need arises to create new branches and offices. I.e., subsidiaries are opened. In the future, companies will be merged into a business group consisting of various companies. Subsidiaries may be newly formed law firms controlled by in-law law firms. As a rule, a subsidiary is governed by a general meeting or decision-making by a board of directors.

Establishing a sub

A subsidiary was formed as any other trading company. But at the same time it is not an independent type of organization, its operation is carried out according to the model of the parent organization. Basically, the main company is a set of shares of the child’s office, and that, it affects all solutions. At the same time, while participation in the “daughter” capital becomes the minimum participation entity, it is not established by law in joint-stock companies or the Civil Code.

Influence of the parent company on the subsidiary

The main company does not have a controlling role in order to affect the subsidiary. Both organizations may work on the basis of a special agreement or in accordance with the charter adopted by the company. For example, a product that a company sends to another company sends the right to use the manufacturing industry. At the same time, in the contract between them in the contract, negotiated to coordinate the sale of goods with a controlling company for a specified period.

Responsibility of the parent company

As a rule, a subsidiary is an independent entity with separate capital and assets. He is not liable for the debts of the parent company and the parent company cannot be liable for the debts of the subsidiary. The regulatory body will be liable for the loans and claims only in two cases:

  1. If the transaction is linked to represent the main setting, this is a documentary confirmation.
  2. If a subsidiary goes bankrupt as a result of implementing the core company’s instructions.

In the first case, one of the debtors has to settle fully with the lender for public obligations and the remaining debts will be released. Second – the principal company must pay part of the debt under the control company, which can not cover its own property.

Objectives for creating subsidiaries

The main company develops under controlled structures in order to intercept the resources of the company and allocate the most promising directions to the specialized companies. Due to this, the competitiveness of the whole company increases. Also, a subsidiary can do the job, which improves the management of the public company. With the help of transaction prices and transactions, it is possible to reduce tax and financial losses. The registration of sub-owners abroad contributes to the development of foreign economic activity at the expense of priority customs and tax conditions.

A subsidiary is an independent entity, a controlling stock or legal entity that owns the parent company. Has the right to control the supply of goods, the sale and transportation of goods, but the total proceeds belong to the parent company. Provides funding for the latter needs: ensuring continuity of production, ensuring pay and more.

Features of subsidiaries

The daughter is directly dependent on the status of the main subject. The latter actually confirms the activities of the system and controls it. Consider the benefits of a subsidiary:

  • All debts of the subsidiary are repaid by the parent company.
  • All financial responsibilities are assigned to the parent company.
  • Competitive advantage is also required to provide the parent company.

However, the subsidiary has drawbacks:

  • Lack of freedom to choose a production area and other basic aspects of the process.
  • Limited ability in technological development.
  • Since the entire capital is owned by the parent company, it is difficult to raise funds for development.

Subsidiaries are generally formed by large companies. They need to distribute activities.

Ways to create a subsidiary

For a subsidiary company, several documents will be required: documentation of the main subject, documentation of the “daughter”, writing the decision to establish a company. The parent company currently has to confirm the debt deficit. There are two ways to build a company.

first time

Consider a comprehensive guide to creating a subsidiary:

  1. Drawing the charter of a subsidiary. All conditions for the existence of this material must be recorded.
  2. If the fixed capital has multiple owners, a contract with the distribution of shares must be compiled.
  3. Drawing by the founders of ethics confirm the fact that an object is created.
  4. The parent must create a document indicating the director, contacts and address “daughter” of the company.
  5. Record of note confirming absence of debts.
  6. Filling.
  7. After registering all the listed documents and the appointment of the chief, it is necessary to submit the documents with the representatives of the subject registered tax authority.

If the head office has debts, he will not be able to finance a subsidiary properly.

The second way

The first way refers to the formation of a company, the second is the appointment of a company. That is, the absorption is taken by the mutual image. Consider the algorithm for this procedure:

  1. Selecting the production direction of a subsidiary.
  2. Development of the charter of the company.
  3. Its own printing, bank details, record of the address of the absorbed object.
  4. Appointment to the post of Director General and Accountant. Integration with them is integration in all aspects.
  5. Important list of appeals and documents to the State House with a statement: a certificate from the banking institution of the account, the characteristics of the general director and the “daughters”, the charter with all the signatures, letter of guarantee, information about the founder who wrote, copies of the payment documents (the last two documents must be certified) .
  6. Obtaining Certificate of Material Registration

After these steps, the company can start its operations.

Responsibility of maternity and subsidiaries

An ancillary object is an ancillary object. Both capital and property are owned by the company. The mother is not liable for the material debts. However, the parent system is responsible for the “daughter” loan in certain circumstances:

  • Transaction registration to indicate maternal company. This symptom should be documented. In this situation and the “daughter” and the parent organization are responsible for equal shares.
  • Approved by bankruptcy, due to parent company orders. In this case, if a subsidiary has to repay the loan, the balance is paid to the head office.

In all other cases, the subsidiary is liable for its debts.

A sub-department

Driving company management is characterized by several features:

  • In a large number of management subjects.
  • Irresistible influence on the “daughter”.
  • Independence of the organization conducting economic activities.
  • Restrictions on “daughters” activities.

There are many models of a subsidiary. Consider them all.

Only administrative system

One-body management is the most common option. A general director under the same law. It is charged with the following liability:

  • Work on current tasks.
  • Available property management (its value should not exceed 25% of the book value of the property).
  • Management of the internal structure of the organization.

The Director General has very broad powers. It is meant to create a document that regulates all the rights and obligations of that person in order to monitor all the administrative decisions of the parent company. Appropriate orders may be included in the charter.

All major executive decisions may be approved by the Board of Directors, including the owners of the parent organization. Such a model is associated with a small number of “daughters”. In the negative case, the following problems may occur:

  • The burden of participation on the board of directors.
  • Complexity in integrated results.

The Board of Directors is for decision making only. If the Council decides that it is not included in its competence, it will not be valid under Nos. 208 of the 67th and 69th Acts of the Federal Law. The competence of the Council may be expanded at the expense of the powers of the Executive Committees. However, the latter should be included in the charter.

Management Company

“Daughter” management can be handed over to the criminal code. Advantages of this method: control centralization, functional distribution, the possibility of integrating all processes. However, if there are multiple subsidiaries, it is difficult for a management company to monitor them.

Ruling body

The essence of the group is that “daughters” leaders are part of the group of the main thing. You must conclude a labour agreement with the participants in the group. Features of the formation of a similar committee in the election of the Director-General. Participants in managers were selected by a meeting of shareholders or a board of directors

Line features

“Daughters” and maternity companies are, from a taxing point of view, recognized by the interdependent. It gives rights to financial authorities to monitor the loyalty of inflation and modify taxation in line with market prices. Since 2008, “daughters” have had a huge advantage when calculating taxes from profits. If the maternal system holds a trial set of shares, the “daughter”‘s future dividends are completely deductible from the profits. Benefits do not apply if a child item is registered in offshore zones.

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