After gaining independence, domestic large organizations, by branching out their activities, relieved business from risks. A subsidiary is an independent legal entity that is controlled by the parent company because of its controlling interest. According to the charter, this is a completely independent “player” with a separate name, legal address, state. The types of activities may not coincide: often such enterprises are created for the purpose of promoting promising directions, not involved in the main organizations.

What is a subsidiary

Many people confuse the difference between the concept of a “subsidiary” and the role of a branch. The key difference is that a branch is not an independent legal entity. He is under significant influence management of the main enterprise, the address is the same, as is the field of activity. An independent organization may have a different line of activity. The creation of a subsidiary occurs at the expense of the main founder’s fixed assets, but the main “player” controls production due to risk reduction.

Purposes of creation

There are several prerequisites for opening such an enterprise. A subsidiary company can be created for the following goals:

• to promote business in new areas of activity (expanding production, changing the vector of development);
• to expand the business (for example, if a manufacturing legal entity decides to develop its own distribution network);
• to increase competitiveness (this will allow introducing a new team, speeding up general development);
• for protection (often network “players” may experience certain problems with assets or legislation, so a subsidiary helps protect part of the assets from the claims of companies/states, courts).

Specifics of activity

The peculiarity of the activities of the parent company is that such an organization has a controlling stake, which allows it to manage a “side” legal entity. According to the norms of international and Russian legislation, it is necessary to have at least 50% (+1 share) for full control, as well as performing blocking functions on decisions. This indicator depends on the composition of the board and the number of shareholders. Sometimes 20% of the shares will be controlling if other members have no more than 1% share. IN joint stock companies it is important to have a majority.

Methods for creating subsidiaries and affiliates

There are two main ways to gain control of a subsidiary. The first is to re-create a legal entity, where 50% of the shares will initially belong to the parent. The second option is redeem half or more shares, become the main managing person of an already existing LLC, OJSC, JSC or other types of legal entities. In the first case, a segment of activity can be formed from scratch, and the direct object of investment will be a new organization. In the second case, all assets come under the control of the parent legal entity.

Managment structure

A controlling stake in a certain participant provides the opportunity to manage and make key decisions on certain issues. If a subsidiary is owned by the parent organization by 50% or more (with a controlling stake), then most of the issues are resolved directly by the head of the new enterprise, who actually duplicates the decisions of the main management.

If the organization does not have a controlling stake, then all conclusions are passed through a vote of shareholders (board members). IN management company An approximately identical management structure has been drawn up, where there is a direct boss, a director, a team of lawyers, and managers. The main thing in this case is CEO or direct owner.

How to open a subsidiary

Subsidiaries are independent legal entities, therefore, to create them, it is necessary to re-develop the Charter and appoint a management team. A legal address is being created (assigned). The current assets are included in the Charter, participation shares are registered (for the first payment). Work is being carried out with the managers of the parent company. According to the minutes of the meeting of shareholders, a final decision is made to create a new legal entity for the purpose of expansion or risk reduction for one type of activity or another.

Preparation of the Charter and development of Regulations on the activities of subsidiaries and affiliates

To operate as an independent legal entity, the originals of the decisions of the meeting of the founders of the head office are required. In this case, the charter is created anew, where investors (their shares), name, information about the founders, production conditions, and final legal address are registered. The main office is preparing statements By state forms 13001, 13002, which will subsequently have to be declared by a notary. If a separate company is acquired in the form of a controlling stake, then meetings are held and decisions are made on the formation subsidiary.

Making decisions at the shareholders meeting and preparing documents for opening a subsidiary

The decision of the shareholders to create a subsidiary is made. This is all written down by the secretary and signed. Issues about future expenses, profit in the division and how the reorganization of property and assets will be carried out are also resolved there. To create a separate company under the direction of an existing head office, it is necessary original prepare the following list of documents for submission to state house:

1. Statement from the side general director or decisions of the board of directors.
2. A certificate from the bank about opening a new account.
3. The drafted Charter of the enterprise, which prescribes subsidiary liability.
4. A new legal address is indicated (a certificate of office rental or other is issued).
5. Information about the founders.
6. Copies of the act of acceptance, receipt of payments or assets (if such a procedure was carried out).

Registration of a subsidiary company

Final decision on registration new company accepted by the State Registration Chamber. If the management of the head office decides to simply create a legal entity without tying it to the main enterprise, then the legal entity will not have the status of a subsidiary. Before registration, the required type of management can be selected: board of directors, separate management company, sole ownership (100% of shares). A subsidiary may begin its activities immediately after obtaining a certificate on registration of a legal entity.

Appointment of a manager and chief accountant

The head office appoints a manager and chief accountant. To do this, draw up a decision or order in writing with a seal. When creating a legal entity, the director is already indicated initially or is selected by the shareholders. Further changes are carried out by the subsidiary's management team. The immediate director remains under the influence of the main office.

What is the difference between a subsidiary and a branch and representative office?

The same factors include paying off debts. As in the case of a branch, the loss is covered by the main management company, and the commercial profit is appropriated by the main office. In case of bankruptcy, costs are transferred to the parent legal entity, but it does not suffer from actual material losses (a branch or representative office is not a separate legal entity). Subsidiary is different from a branch or representative office by the following factors:

• having its own legal address, Charter and management team;
• the opportunity to work in any field of activity, regardless of the main office;
• Most transactions are executed on behalf of the head office.

Legal independence

The organization is characterized by subsidiary legal independence - managerial function Local managers take charge, and decisions remain with the main office. Different from a branch, a separate legal entity has its own seal and makes all deliveries, purchases, and sales in its own name. Carrying out independent transactions leads to having a separate bank account. The final net profit is distributed among the shareholders. The debts of the main firm can be covered by these profits, which often happens in multinational corporations.

Decision-making authority

All key decisions cannot be made independently. For this it is necessary final word board of shareholders of the main company. Decisions can be made on site regarding purchasing, production management process, sales, methodology and more. New products and technologies are being created under control head office management. The two leaders constantly maintain contact with each other. Given the direct appointment of directors by the parent organization, disobedience is not allowed, which is often enshrined in the Articles of Association.

Recognition and fulfillment of obligations

All actions are based on the written opinions of the directors. Orders in written form with a seal are received at the legal address of the second company. Liabilities exist only in relation to the company's own activities. However, the media often monitor the policies of the main company and its subsidiaries.

In what cases is a parent company liable for the debts of a subsidiary?

The parent company bears responsibility for the debts of a subsidiary, if:

• a written agreement was drawn up between the two enterprises, which describes the conditions of subsidiary liability;
• The head office led the dependent company to negative financial results by issuing certain management decisions.

Otherwise, each legal entity bears legal and financial responsibility separately, because organizations have separate property (assets), bank account, income and expenses. Material liability debts may arise as a result of a court decision, when one of the parties was declared bankrupt, and debts to creditors will have to be repaid to the second member of the holding.

Financial activities

Financial activity is independent, because a separate bank account is created for the established company. All receipts, acceptance certificates and other documents are issued to the new legal entity. To do this, a stamp is created with its name and address. Financial activities may differ from those conducted by the main office. For example, if the parent organization produces raw materials, and the second company provides legal advice and consulting. Financial statements cannot be linked to each other. Tax documents are submitted separately.

Accounting

To start the company's activities, it is necessary to create a separate bank account. The management head office has a separate and independent financial system, therefore all reporting is prepared separately, in accordance with the budget. The parent and subsidiary enterprises have different balance sheets according to the charter and legal address. Tax reporting is submitted to territorial body at the place of registration office, an accounting department is hired separately to carry out reporting on behalf of the DC.

Tax accounting

Tax accounting is also maintained separately, and all reporting is submitted to the territorial fiscal authority. According to the law, a subsidiary has separate and independent assets that are not intertwined with the parent organization. Administrative functions are performed under the direction of the director of the cultural center. Interweaving may occur if part of the assets are transferred from the main company in the course of its activities.

Relationship between parent and subsidiary companies

An independent market participant is a subsidiary, which is always under the influence of the head office. Recruitment of employees, choice of work system, etc. remain for the locals managers. Enterprises are connected only by clauses in the charter and by the founders, when the controlling stake belongs to the main company. Any participant can work abroad and represent the interests of another in foreign countries, before investors. An investor can invest in a subsidiary legal entity without directly contacting the head office manager.

Consolidated reporting

One type of financial reporting is consolidated. It is submitted by several participants working as one. This also applies to parent or subsidiary companies. It must be drawn up in order to display the real position of the whole financial group. After all, if one participant has a loss, then the shares of the second may fall as a result (and vice versa). In consolidated statements Special attention pay attention to the capital of two independent firms, their relationship, communication and activities.

The issue of consolidated reporting is clearly stated in international standards, standards - IAS 27, IFRS 3, 28 and 31. The system of international financial reporting standards describes the need to indicate debits, credits, assets and other financial details. IN Russian Federation This topic is covered by Government Orders of 1998-1999.

Tax benefits

On general conditions Tax benefits are allowed when a number of legislative requirements are met. According to the norms of the law, the DC has the form of a separate legal entity and can act as an independent payer of value added tax. As a result, tax benefits for transactions between companies are fixed only in the “arrival and departure” position of funds or assets. Income tax is deducted once.

Pros and cons of subsidiaries

To decide whether to create a subsidiary, you need to weigh all the pros and cons. Advantages.

The process of transition to them includes the use of control and influence mechanisms between organizations, as well as their mastery. For USA and countries Western Europe this stage is considered completed. As for the Russian Federation, its completion is still far away.

General information

The above is explained by the weakness of the domestic legal framework. It regulates relationships of dependence. However, there is a plus in this situation. It's about about the possibility of using other people's experience, which is time-tested. However, this is not always implemented by the legislator. In this case, it is advisable to study theoretical issues that are associated with relationships of interdependence between commercial organizations. Thanks to this, there will be a significant reduction in the list of problems that arise in practice.

Basic Information

What does the concept of subsidiaries and dependent companies include? The relevant law must be consulted. According to it, a company is considered a subsidiary if another economic organization has the opportunity to determine the decisions that it makes. This can be done by virtue of a concluded agreement, (dominant) participation in the authorized capital, or in another way. Still in the same article, the concept that defines the term “dependent society” is indicated. It is recognized as such if the dominant organization concentrates more than 20% of the relevant shares of the first.

Management of subsidiaries and dependent companies

Here the presence of an element of indirect economic and legal control is noted. This can be seen both in the relations of the dominant-dependent and the main-subsidiary societies. The presence of control indicates the existence of a relationship of subordination and power. This also applies to subordination. Thus, subsidiaries and dependent companies are connected with each other. The main ones, to one degree or another, can manage the subordinates. That is, they influence the decisions made by the subsidiary. In particular, this applies to those adopted by the board of directors or general meeting of shareholders.

Subsidiaries and dependent companies. Features of operation

They are not deprived of the status of a legal entity due to the presence of an element of subordination. That is, we are talking about an independent subject of civil law relations. In accordance with this circumstance, subsidiaries and dependent companies are fundamentally different from representative offices and branches. The latter are considered only as divisions of the organizations that created them. In this case, there are a number of other nuances. For example, subsidiaries and dependent companies can be created in any location. This also applies to the location of the main organization. This is excluded for representative offices and branches.

Nuances of creation

This organizational and legal form is not named in the legislation. In this regard, we can conclude that subsidiaries and dependent companies can be created in any form permitted by the legislation of the Russian Federation. We are talking about the following business companies:

1. With additional responsibility.
2. Shareholder.
3. With limited liability.

Main differences

Subsidiaries and dependent business companies are separated one by one common feature. We are talking about a legal relationship. However, there are certain differences between them. The basis of a subsidiary is the criterion of the ability of the dominant structure to determine its decisions. At the same time, the dependent is determined by the formal condition of the participation of the dominant organization in its authorized capital.

Target orientation

Authorized capital

There are certain difficulties when using this criterion. The question is how to define the term “predominant”. As for the lack of a formal size of participation in the authorized capital, this makes it possible to recognize the organization as the main one, even if it has a stake of less than 20% of the voting shares of the subsidiary. Predominant participation also has a number of specific nuances. It does not mean at all that the main society will influence absolutely all decisions of the subsidiary.

Financial and industrial groups, concerns and holdings

A system of companies bound by control and economic dependence is formed by the main company together with its subsidiaries. It can be called a financial and industrial group (RF), a holding (England, USA) and a concern (Germany). The content of these formations is identical. Thus, for further convenience, one general term will be used - “holding”. Its creation is objective from the point of view of business practice.

So, the enterprise has become quite large. is increasing, extensive investment projects. It becomes necessary to create divisions of the company, as well as subsidiaries. A certain hierarchy is needed. Minimization of tax and other mandatory payments is also required. This situation is quite natural for business development. Accordingly, we can say that the holding arises independently. What, in essence, are the largest Western companies today? These are entire systems consisting of main and subsidiary communities that are interconnected. We are talking about groups of individuals who have united under one brand name.

According to statistics from the Monde Diplomatic publication, in the 90s. There were about 37 thousand transnational organizations functioning. They, in turn, had approximately 170 thousand branches and subsidiaries. In Russia there are several largest companies, which have So, there are subsidiaries and dependent companies of Russian Railways, RAO Gazprom, YUKOS, LUKOIL. Currently, a number of domestic enterprises classified as medium and small businesses are characterized by a similar organization of corporate activities in one form or another. Using the structure of the holding system, many important problems can be solved, including:

• organizing the implementation of a coordinated sales and production policy;
• effective management of subordinate enterprises.

At the same time, there is no special legal regulation. However, in Western countries it is available. Thus, the potential of this structure is not fully realized.

Subsidiary

SUBSIDIARY COMPANY

Finance. Dictionary. 2nd ed. - M.: "INFRA-M", Publishing House "Ves Mir". Brian Butler, Brian Johnson, Graham Sidwell and others. General editor: Ph.D. Osadchaya I.M.. 2000 .

Subsidiary

A foreign branch of a company, which, according to the laws of the country where the branch is located, is an independent legal entity.

Terminological dictionary of banking and financial terms. 2011 .

See what a “Subsidiary Company” is in other dictionaries:

subsidiary- A company controlled by another company, called the parent. In accordance with Russian legislation, a business company is recognized as a subsidiary if another (main) business company or partnership due to... ... Technical Translator's Guide

- (subsidiary company) See: group of companies. Business. Dictionary. M.: INFRA M, Ves Mir Publishing House. Graham Betts, Barry Brindley, S. Williams and others. General editor: Ph.D. Osadchaya I.M.. 1998 ... Dictionary of business terms

- (subsidiary) A company owned or controlled by another company. Exists a large number of options for the scope of authority that subsidiaries may have with respect to decentralized decision-making on issues such as... ... Economic dictionary

SUBSIDIARY COMPANY- a company whose controlling interest is in the hands of another parent company. The size of the block of shares required for real control over the company is determined not only by its share in the total share capital (voting shares), but... ... Foreign economic explanatory dictionary

Subsidiary- a company is a subsidiary of another company, which in this case is called the parent, if the latter owns more than 50% of the share capital or if it exercises effective control, which is determined by ... ... Glossary of terms on expertise and real estate management

SUBSIDIARY COMPANY- - a business company in conditions where “another (main) business company or partnership, by virtue of a predominant participation in its authorized capital or in accordance with agreements concluded between them, can determine decisions ... ... Economics from A to Z: Thematic Guide

SUBSIDIARY COMPANY- SUBSIDIARY COMPANYA corporation controlled by another corporation. Control is ensured by the controlling corporation having all or part of its voting shares, interlocking directorship, leasehold relationships, or common interests. Many... ... Encyclopedia of Banking and Finance

Subsidiary- (SUBSIDIARY) A company that is controlled by another company (known as the parent company) ... Finance and stock exchange: dictionary of terms

A subsidiary is a business company whose decisions are determined (or may be determined) by another (main, parent) business company due to the latter’s predominant participation in its authorized capital (the amount of predominant participation ... Wikipedia

Subsidiary- – a branch of the parent (parent) company, under its control. Maintains legal independence. In case of losses or bankruptcy, the parent company is not responsible for the subsidiary... Commercial power generation. Dictionary-reference book

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Large corporations are opening new organizations in order to expand their business. They are called "children". The company's enterprise creates these at its own expense. It is responsible for their work to the state and regulatory authorities. Accordingly, the management of subsidiaries is carried out from the parent organization. However, such companies are not responsible for the work of the main corporation. Let us next consider what a subsidiary LLC is.

General information

A subsidiary is a legal entity. It must be registered in the manner prescribed by legislative acts. The formation of a new company is carried out by transferring part of the property to economic management. Acting as a founder, the main corporation approves the head of the organization and exercises the rights of the owner, as established by the relevant regulations.

Specifics

A subsidiary is an organization whose structure is identical to that established at the main office. The difference between the two is that the parent corporation has more rights and benefits. However, she also has more responsibility. One of the advantages of the main office is the ability to make administrative decisions regarding all activities of the open company. It is generally accepted that to fully participate in its activities you must own 3% of its shares. However, in practice this figure rises to 5%. Of course, a controlling stake (more than 50%) provides many advantages to the main corporation. At its core, a subsidiary is separate division. Activities are controlled not only by the main corporation, but also by the state. All financial transactions are under close supervision of supervisory authorities.

Management

The main organization sends its employees to newly opened companies. The head of the representative office receives a seat on the board of directors. For example, Gazprom's subsidiaries operate on this principle. Employees of the main office can give orders and recommendations for promoting the business and for all activities of the organization as a whole. However, the right to make the final decision belongs to the head of the subsidiary.

Compensation for losses

In some cases, the established company begins to lose profits due to the illiterate policies of the main corporation. In such situations, creditors have the right to demand that the parent company repay the debt. Counterparties act similarly in the event of bankruptcy of an open organization.

Possibilities

A subsidiary is primarily a tool for business expansion. Due to the network of such organizations, the main corporation can significantly strengthen its position in the market. A large holding company undoubtedly has more weight than a single company. An example of this is the subsidiaries of Gazprom. One of the key tasks of such organizations is to identify potential competitors On the market. Often, single firms quickly leave the sector when a representative office of a large holding appears in it. In addition, a subsidiary may be formed to capture new market segments. To increase capital inflow, the corporation must look for new, more promising sites. This causes large corporations to actively enter international markets by opening representative offices abroad.

Advantages

Large corporations may face various challenges during the course of their operations. To solve some of them, an enterprise can create a subsidiary company. Often a corporation needs to improve its administration system and free itself from routine activities. The formation of a new organization may well contribute to the implementation of this task. At the expense of the subsidiary, such important problems as personnel selection and the fight against competitors are resolved. The more such organizations a holding has, the more advantages it has in the market.

Subsidiary and parent company

The situation is considered quite normal when an organization formed by the main corporation becomes an independent company with separate property and own capital. Accordingly, it is not liable for the debts of the parent company, just as the main holding cannot be held liable for the obligations of the subsidiary. Meanwhile, the legislation still provides for a number of cases in which demands can be addressed to the main corporation. The parent company is liable when:

• the conclusion of the transaction took place on her orders (this fact must be documented);
• the subsidiary carries out the orders of the parent organization and is declared insolvent (bankrupt).

In the first case, settlement of obligations is carried out in full. In the second situation, the parent company repays only that part of the debt that the subsidiary is unable to pay.

Difference from branch

First of all, the subsidiary has legal autonomy. The branch is fully connected to the main office. This fact predetermines other differences. In this case, it often happens that the main corporation opens a subsidiary in one region and a branch in another. Both organizations will have the same goal. In this regard, in practice, most of the work of branches and subsidiaries does not differ much. The discrepancy between these organizations can only exist on legal grounds.

Features of creation

Before opening a subsidiary, it is necessary to develop a Regulation on its activities. Based on this document, the new organization will work. In addition, changes must be made to the charter of the main corporation. Applications must be sent to the registration authority in the prescribed forms. The formation of a subsidiary should be discussed at general meeting. This matter must be entered into the minutes. The package of documents must be accompanied by the decision of the meeting on the creation of a new organization.

During the discussion, the head of the future company is determined. The prepared package of documents is certified by a notary and sent to the registration authority. The subsidiary company will be considered created from the moment the corresponding entry is made in the Unified Register. After this, organizational issues are resolved. The subsidiary must have the entire package of documents established for legal entities. The organization also needs to register with the tax office.

A subsidiary is a legally independent enterprise, separated from the parent (main) economic entity, established by it through the transfer of part of its property (capital). As a rule, it acts as a branch of the parent company that founded it.

The charter of such an enterprise is approved by its founder, who retains certain managerial, control and other administrative functions in relation to it. The ability to control the activities of a subsidiary is guaranteed by ownership of its shares and is based on the principle of a participation system.

The subsidiary company exists in difficult conditions of participation of the parent company in its capital. That is, it is dependent on the head office.

Until 1994, the term “subsidiary” meant an enterprise in which the majority of fixed assets (capital) belonged to another company. After the adoption of amendments to the Civil Code of the Russian Federation (Article 105), the meaning of the term changed. Nowadays, “subsidiaries” are understood as those created by other companies by virtue of their predominant participation in, or having the ability to control and approve decisions made by such enterprises. In other words, the emphasis is on the right of the parent company to determine the decisions made by the branches it creates.

Relations between parent and subsidiary enterprises are based on the principle of responsibility of the main company for the obligations of the enterprises established by it. They are jointly and severally liable for transactions concluded in pursuance of mandatory instructions head enterprise. In the event of bankruptcy of a subsidiary due to the fault of the parent company, the latter must bear all obligations.

A subsidiary company is created by establishing a new organization or separating it from the structure of the parent company.

Typically, the decision to create it is made when it is necessary to concentrate production in specialized areas in order to increase the competitiveness of an economic entity and develop new markets. New business units are, as a rule, more mobile, flexible, and quickly respond to changes in the market for a particular product. Most topical issue The creation of divisions is for large manufacturing enterprises.

As stated, there are two ways in which a subsidiary can be created: reorganization of an existing company (including a form of spin-off) and the formation of a new one. A more common way is to separate it during the reorganization of legal entities. In this case, one or more companies can be created without terminating the activities of the company that is undergoing reorganization. The choice of creation method depends on many factors.

Organizational aspects and existing deadlines play a big role in this. The procedure is quite complex and lengthy (takes up to six months). The establishment of a new company is a simpler and less lengthy event (can be completed within two weeks). In addition, when choosing the method of establishing a subsidiary, factors such as the establishment of a decision-making body are taken into account; notification of creditors; succession issues and others. In addition to organizational problems, there are also those related to income tax.

Making a decision on the way in which a subsidiary will be created is associated with an analysis of the advantages and disadvantages of each of the above, taking into account the individual characteristics of the parent organization (composition of property, production volumes, etc.).