When opening branches or subsidiaries, it is necessary to take into account their important differences. For example, a subsidiary is a legal entity that can, on its own behalf, acquire and exercise property and personal non-property rights, bear obligations, be a plaintiff and defendant in court. A branch is not a legal entity. What to give preference to - a branch structure or a network of subsidiaries?

Large companies were formed spontaneously - they bought the enterprises they liked and sold the "objectionable ones". After the composition of the assets was already determined, structural adjustments began, which are still going on. And if the answer to the question about the consolidation of various assets into subgroups depends entirely on the specifics of a particular holding, then how is the issue of the legal form of geographically distributed divisions resolved? What to choose - a branch structure or a network of subsidiaries?

There is no single correct answer to this question. Much will depend on strategic business goals , types of activities implemented by the holding, and other equally important factors. As a rule, the branch network is used by groups that have one key area of ​​activity, the rest prefer to create their divisions in the form of subsidiaries. In addition, the second option is safer for business in general.

Russian holdings decide for themselves the question in different ways: should they use subsidiaries or branches in the structure? The general rule that can be distinguished from the analysis of practice will be as follows: vertically integrated holdings and diversified corporations give preference to "subsidiaries", mono-holdings that have one key type of activity create branch networks.

Download helpful documents:

What is a subsidiary

An example is the experience of MOESK, which provides electricity transmission services. It has several branches, each of which already reflects its specialization in its name: Moscow Cable Networks, Central Electric Networks, etc. But in addition to branches, MOESK also has subsidiaries - these are companies whose activities are more of a supportive character. A large retail chain did the same. She transferred most of her stores from the category of "daughters" to branches.

Expert Experience

Anatoly Ryzhov, specialist in the treasury department of a large retail chain

Until February 2008, each store was registered as a separate legal entity (subsidiary). In order to use such functions of the bank as collection, payment for non-cash services (acquiring, consumer lending), to make payments between branches and the managing company, we had to open two or three current accounts for each store. Considering that our company had about 400 such subsidiaries, more than a thousand current accounts were opened and serviced throughout the group. Moreover, each of them had its own database in the accounting system. All this was the cause of many various errors and painstaking work on their analysis and elimination. The worst thing about the current situation was that it was simply unrealistic to control mutual settlements on all accounts. To understand the scale of the problem, I will say that on average we had to register about 500-600 outgoing and more than 10,000 incoming payments per day.

But there are also such enterprises that, even with one pronounced type of activity, prefer the subsidiary structure of the branch network.

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Features of creating and managing a subsidiary

Holdings do not have any particular problems when opening branches or subsidiaries, however, there are important differences that must be taken into account when determining what the group structure will be.

The procedure for creating branches by joint-stock companies or limited liability companies is determined by the Federal Laws: “On Joint-Stock Companies” dated December 26, 1995 No. 208-FZ and “On Limited Liability Companies” dated February 8, 1998 No. 14-FZ. The fundamental difference is that in order to open branches, an LLC requires a decision of the general meeting of participants (at least two-thirds of the votes), and in joint-stock companies, amendments to the charter regarding the creation of branches, their opening or liquidation lies within the competence of the board of directors. By analogy, decisions are made on the creation (participation) in subsidiaries, there is no fundamental difference.

An important point is the management of a new structural unit. The choice in favor of one or another option will largely be dictated by how centralized management is in the group.

Branches are headed by a manager appointed by the holding, who acts on the basis of a power of attorney and regulations on the branch (Article 185 of the Civil Code of the Russian Federation). And there are no problems with control. In the position or in the power of attorney, one can clearly define the powers of his head, up to the types and size of transactions that he has the right to make. And also it will not be superfluous to prescribe the procedure for coordination with the relevant services of the holding.

Things are different with the holding structure, which consists of subsidiaries, each of which has its own executive bodies, which means the ability to make decisions independently. The holding, in order to obtain the necessary control over its "daughter", will need to indicate in its charter what types and amounts of transactions must be carried out with the approval of the board of directors or the general meeting (Article 52 of the Civil Code of the Russian Federation).

In other words, the management company of a group consisting of subsidiaries is more likely to interfere in the strategically important decisions of its wards, but not in operational management. For many holdings, this is an ideal option, allowing not to inflate the staff of managers, as well as quickly respond to the changing situation in the regions.

Expert opinion

Tatiana Lvova

Among the advantages of the branch variant of the organization of the company is that the branches are in the sphere of direct action of the administrative mechanisms of the parent company. At the same time, when choosing the organizational and legal form of a subsidiary, in many cases preference is given to creating a subsidiary with the right of a legal entity, since it is a full-fledged subject of economic relations.

A subsidiary is a firm that may have greater responsibility and independence, and its functionality, as a registered independent legal entity, is much higher. So, it (even in the form of a limited liability company) is able to issue securities, which is not available to a branch.

But with the "branch option" there is no holding company with its advantages, which consist, in particular, in the separation of property and liability of the main and subsidiary business companies. The organization bears full property liability for civil-legal obligations of the branch.

Tax aspect

The choice in favor of a branch structure or the creation of subsidiaries is seriously influenced by the issues of formation and tax reporting, as well as the risks of claims from the tax office. Let's dwell on this in more detail.

Let's imagine a very real situation: the tax inspectorate has requested a certain set of documents relating to the work of the holding's division, and it must be provided within ten days. If the unit is created in the form of a branch, then, to solve the problem, well-established methods of transferring data and original documents will be required. Despite the development of information technology, the problem may not be trivial. In principle, such difficulties cannot arise with a subsidiary, since it acts as an independent legal entity and all documentation is kept at its location.

Moreover, the branch structure will require additional efforts from the holding to maintain tax records. So, in relation to income tax, you will have to calculate the amount relating to each branch (Article 288 of the Tax Code of the Russian Federation), and the declaration must be submitted not only at the location of the company, but also where they are located (Article 289 of the Tax Code of the Russian Federation). In addition, the location of the units will have to pay taxes on movable and immovable property belonging to them. And in addition to everything, the branch structure involves the consolidation of all business operations of divisions in the financial statements, which provides a considerable burden on the accounting department.

Expert opinion

Artem Bersenev

Unlike a branch, the establishment of a subsidiary, that is, a separate legal entity, can significantly reduce the costs associated with maintaining accounting and tax records in the parent organization in the branch form, since such costs will be borne by it itself. This means that the responsibility for the reliable formation of accounting and tax reporting rests with him.

In addition, it should be borne in mind that the presence of branches can lead to an increase in the timing of the field tax audit head organization. Also, its liquidation can also initiate an on-site tax audit of the parent organization. In turn, such rules of on-site tax audits do not apply to subsidiaries.

At the same time, holdings consisting of subsidiaries also have a number of disadvantages. One of the favorite topics of the tax authorities is intracompany transfer pricing , which is often used by groups, including for the redistribution of profits between their member enterprises. It is clear that this problem does not concern the branch structure, but is the exclusive prerogative of subsidiaries. Moreover, the loss received by one of the "daughters" of the holding cannot be used to reduce the taxable base of another "daughter" or the management company.

Expert opinion

Artem Bersenev, tax consultant of the department of tax law and consulting LLC "Intelis-Audit", Ph.D. n.

As a rule, separate cost estimates for their maintenance are prepared for branches for a certain period of time (most often for one calendar year, broken down by quarters (by months)). At the end of the established periods of time, the branches form the appropriate reports to the parent organization. At the same time, the fact has become quite common when the costs of maintaining it exceed the income generated by it, which leads to the need to eliminate them.

For subsidiaries, the most common form of management reporting is budgeting and performance reports. Moreover, if such a company is unprofitable, then the liquidation of a separate legal entity for the parent organization is more painless.

Other people's obligations

The most serious drawback of the branch structure in a crisis is that branches act on behalf of the society that created them. In other words, the holding is fully responsible for their actions: it pays fines and compensates for losses. Moreover, if the tax inspectorate seizes the holding's accounts because of one branch, this can paralyze all of its work.

It's easier with subsidiaries. These are legal entities within the holding, which are independently liable for their obligations. But it must be taken into account that the parent company in case of problems with the "daughter" can be held jointly and severally or subsidiaryly liable. In the first case, the parent company gave instructions to the subsidiary that were binding. In the second, it went bankrupt, following the direct instructions of the holding's management company, and now the "daughter" does not have enough of its own assets to pay off all obligations. Their shortage will most likely have to be compensated by the holding's management company at the expense of its own property or cash.

Expert opinion

Tatiana Lvova, lawyer, consultant of the INTELIS group of companies

The current legislation enshrines the cases of assigning responsibility for the transactions of a subsidiary to the parent organization:

the parent organization, which has the right to give instructions to the subsidiary, including under an agreement with it, instructions that are obligatory for it, is jointly and severally liable with it for transactions concluded by the latter in pursuance of such instructions. In paragraph 31 of the Resolution of the Plenums of the Supreme Court of the Russian Federation and the Supreme Arbitration Court of the Russian Federation dated July 1, 1996 No. 6/8, it is noted that both legal entities are involved in such cases as co-defendants in the manner prescribed by the procedural legislation;
the parent organization bears subsidiary liability for the debts of the subsidiary in the event of insolvency (bankruptcy) of the latter, which arose through the fault of the parent organization.

It should also be noted here that the legislation establishes the right of the participants (shareholders) of a subsidiary to demand compensation from the parent organization for losses caused through its fault to the subsidiary, unless otherwise provided by laws on business companies.

Table. Key differences between branches and subsidiaries

Branch	Affiliated undertaking
The branch is not a legal entity, and therefore, a participant in relations regulated by civil law, that is, the branch does not acquire property and personal non-property rights, is not an independent party to the contract, does not bear independent property liability, cannot act as a plaintiff and defendant in court.	A subsidiary is a legal entity, that is, it owns, manages or manages separate property and is liable for its obligations with this property, can acquire and exercise property and personal non-property rights on its own behalf, incur obligations, be a plaintiff and defendant in court .
The location of the branch does not coincide with the place of registration of the parent organization (read also about new rules for changing the legal address for organizations ).	The activities of the subsidiary, as well as the parent organization, are managed by the bodies of the subsidiary, acting in accordance with the law, other legal acts and constituent documents. The task of the governing bodies of the parent organization in this regard is to ensure the passage of their teams through the subsidiary, that is, to develop and apply optimal corporate control tools.
The head of the branch acts on the basis of a power of attorney issued by the parent organization.	Operates on the basis of the charter or the memorandum of association and the charter, depending on the chosen organizational and legal form.
Operates on the basis of the position approved by the parent organization.	Has separate property. Separation of property is inherent only to a legal entity.
It has property assigned to it, which is not separate. Due to the fact that the property of the branch is not separate and belongs to the parent organization, it can be levied for the debts of the parent organization, and the liability will not be subsidiary. And vice versa, for obligations related to the activities of the branch, the parent organization bears full property responsibility.	Not responsible for the debts of the parent organization. Therefore, risky economic transactions may be entered into on behalf of subsidiaries.
Carries out all or part of the functions of the parent organization, including the functions of representation.	Can engage in any activities not prohibited by law.
Information about the branch must be indicated in the constituent documents of the legal entity.

VIDEO: How to objectively evaluate the results of subsidiaries

Inconsistent reporting of subsidiaries, different performance indicators - are you familiar with such problems? If so, it's time to revise the methodology and procedure for evaluating the performance of subsidiaries. How to proceed, look at the video.

You will need

• - documents of the main company;
• - charter of the subsidiary;
• - the decision to establish a subsidiary company;
• - an application form in the form p11001;
• - a document on the absence of debts of the main company.

Instruction

Draw up the charter of the subsidiary organization and write down all the necessary conditions in it. If there are several holders of the authorized capital, then you need to conclude a memorandum of association, where the main point will be the distribution of shares between them. As a rule, a subsidiary is an organization in which the parent company has at least 20% of the total capital (shares).

Draw up a protocol of founders or a sole decision on the creation. The document is signed by the chairman, secretary of the council of participants or the sole founder.

As a rule, any company being created (including a subsidiary) must provide a legal address. A document about this must be written by the director of the main organization.

The parent company should not have debts to the budget, tax authorities. In the registration chamber, the main company must request a letter indicating that there are no debts. Of course, the subsidiary is not responsible for the debts of the parent organization, it can recover from it the losses incurred through the fault of the main enterprise, but when creating a subsidiary, the absence of debts is necessary.

Fill out an application form p11001. Indicate in it the necessary information about the legal form, name, address, authorized capital, founders and sole executive body.

When creating an enterprise, submit the completed form along with the above documents, the certificate of state registration of the parent company, copies of the passports of the director of the subsidiary and the appointed chief accountant to the tax authority at its location. After registration, the subsidiary will be able to carry out activities: conclude contracts, have its own balance sheet, bank account and seal.

Sources:

• Registration of a subsidiary
• establishment of a subsidiary

In accordance with article 105 of the Civil Code of the Russian Federation, the subsidiary company is not created, but recognized in accordance with the agreement concluded by him with the head company m. How to register such an institution?

Instruction

Select the line of business to be carried out by the subsidiary company your company. Please note that this activity may be different than that of the parent company.

Develop a charter. Subsidiary company- this is an independent organization that maintains its own documentation, but, despite this, is the property of the founder (in this case, your legal entity). The reorganization of the subsidiary will also depend entirely on you.

Register a legal entity. By law, a subsidiary company must have its own bank account, details of the organization, its seal. So the child company will be able to conclude contracts, regardless of the parent.

Many businessmen do not see the difference between opening a branch, a representative office or a subsidiary. Meanwhile, it is there and very tangible. Before making a decision on the reorganization of existing production, one should understand the terms and choose the most appropriate form of expanding activities.

What is a branch office?

This word is called a separate subdivision of a legal entity, which gives it a full range of powers or only a part of it. A branch of an enterprise or organization may be located on the territory of a foreign state. In this case, all aspects of its activities must be coordinated with the legislation of this country, since it may differ significantly from the domestic one.

The branch must be included in the unified state register, but it is not a legal entity. He is fully subordinate to the management of the parent company and exercises his powers only on the basis of a power of attorney. About the “separate subdivision”, branch and representative office, according to Art. 95 of the Civil Code of the Russian Federation. The Civil Code spells out all the stages of opening a branch.

What is a subsidiary?

This is a more independent separate subdivision, which is formed by transferring part of the property of the parent enterprise to the full economic management of the subsidiary. Its founder determines the Charter of the subsidiary and the ownership rights to the transferred property.

This form of management is beneficial for the head office in that it relieves itself of the obligation to manage the document flow at this facility and is content with receiving basic reports on the work of its subsidiary. The main responsibility for its activities lies with the business executive appointed by the head enterprise. He is engaged in the organization of work, the "promotion" of the unit, manages all current operations. But he is obliged to coordinate all major costs and decisions with the head office.

Thus, the conclusion is: a subsidiary is a more independent unit, endowed with much greater powers on the part of the founder, possessing property transferred to him on the basis of ownership. The branch has much more limited opportunities both in terms of independent management and document management.

You will need

• A clear business plan for the manufacture and sale of their own products, developed motivation for staff, capital that can be used for bonuses, incentives, etc., a management team and several theoretical manuals on personnel management.

Instruction

To open and manage any enterprise, a clear plan is needed, which will take into account investment risks, stages of development of the enterprise, volumes, points and methods of selling products, and a number of other points that affect development. With a good business plan, you can get a significant amount of money from the bank or from people who want to share with you.

Any enterprise needs leadership, that is, a management group that will set clear goals for the team and monitor their implementation. The leader of the management group is the director of the company, who manages several top managers. These should be competent people familiar with the theory and practice of management and personnel. Their number depends on the size of the company and may be different.

On must be developed by personnel. It can be both encouraging and punishable measures. The so-called "carrot and stick method" is used in the manual of many . It is advisable not to abuse the “whip”, as this can scare away potential highly qualified specialists, earn the company a bad name in the labor market and increase employee turnover. The amount of money allocated for bonuses and cash incentives is better in advance when budgeting for the new year, in order to avoid subsequent problems with and reporting.

note

When forming a management team, see if your top managers are able to convey the required goals to the staff and stimulate the team to further productive work. Many managers, alas, sometimes do not have a clear idea about the main, short-term and long-term goals of the company. It happens that in the course of development, it is necessary to reorganize the enterprise, the consequences of which also need to be carefully analyzed.

Helpful advice

It would not be superfluous to conduct focus groups to discuss the problems of the team and the work of the company, attract various consulting firms, conduct audits, trainings and seminars to improve the quality of the services offered and coordinated work in the team.

Tip 3: What is the difference between director and CEO

How the head of an enterprise or organization will be called - president, director or general director - is specified in the Charter of this enterprise. But on what basis the name for the manager is chosen and how his labor relations with the enterprise are built, you need to figure it out by referring to the legislation.

How to "call" the head of the enterprise

There is a contractual relationship between the head of the enterprise and the enterprise. They are regulated by federal laws, including: the Labor Code of the Russian Federation, federal laws "On Joint Stock Companies", "On Limited Liability Companies", as well as other regulatory and legal documents and acts approved by the subject of the Federation or the territorial body of local self-government.

The founding documents of the organization and, in particular, its charter must state the name of its head - an individual who manages and performs the functions of the sole executive body, as defined by Article 273 of the Labor Code of the Russian Federation. According to it, the founders can choose any name: director, general director, chairman or president - there is no difference, it does not change the essence, the rights and obligations of the head also do not depend on this.

The head of the organization is an individual elected to the position by the general meeting or who occupies it on a competitive basis.

Therefore, you can choose any name, but you should still take into account the specifics of the work, the field of activity and the volume of production of this particular organization. If it is small, its leader may, without any prejudice to his authority, be called a director. But in the case when this is a fairly large enterprise, which has, for example, several branches and subsidiaries, their leaders can be called directors, and the general one will be the one who exercises general management. The head can also be called the general director in the case when the company provides for positions, for example, technical, financial or executive directors.

The signature on behalf of the employer in the employment contract is put by the person specified in the Charter. This may be the chairman of the general meeting of founders or the chairman of the Board of Directors.

Features of registration of labor relations with the head of the enterprise

Whatever the name of the head of the organization, in accordance with Article 20 of the Labor Code of the Russian Federation, in the employment contract with him, this organization itself must be indicated as an employer. The basis for employment and the conclusion of an employment contract will be the decision of the meeting of the founders or their competent body - the Board of Directors. All these nuances should be reflected in the Charter.

In the course of accounting, an accountant may detect a shortage of inventory items that arose as a result of damage, theft or natural loss. In this case, an inventory is organized at the enterprise, which is designed to identify the validity of the amount of debt for shortages and determine the guilty person.

Instruction

Approve the order to conduct inventory if a deficiency was found. Indicate in this document the date of the event, the composition of the commission and the property that is subject to verification. Provide the commission with all receipts and expenditure documents for this case. Determine the balance of values ​​according to accounting data. Collect receipts from financially responsible persons.

Determine the actual availability of property, draw up an inventory and a collation statement, which will allow you to identify the amount of the shortage. If it refers to cash, then it is also necessary to audit the cash desk and draw up an appropriate act. The balance of cash is checked against the data of the company's cash book.

Reflect the amount identified during inventory and revisions of shortages on the debit of account 94 “Shortages and losses from damage to valuables”. At the same time, in correspondence with this account, there is an account that characterizes the values ​​for which this fact was discovered. So account 50 “Cashier”, account 10 “Materials”, account 01 “Fixed assets”, account 41 “Goods” and so on can be used.

Draw up an act of shortage, which occurred due to regrading, natural attrition or technical losses. On the basis of these documents, the amount of the shortfall must be reflected in the credit of account 94 in correspondence with account 20 "Main production", account 44 "Sales expenses" and so on. At the same time, for tax purposes, these costs are related to the material costs of the enterprise.

Demand a written explanation from the employee if the shortage was due to theft. If the employee refuses to provide explanations, then an appropriate act is drawn up. The amount of damage is determined by the actual on the basis of market prices. At the same time, in accounting, the amount of shortage is attributed to the debit of account 73 “Calculations for compensation for material damage”. After that, the difference between the recoverable amount and the book value of the missing value is reflected in the credit of account 98 “Deferred income”.

Tip 5: How to get a newsletter from statistics

The state carries out statistical accounting of all legal entities, therefore, in the process of registering an enterprise of any form of ownership, you need to register it with the bodies of Rosgosstat, without which opening a bank account will simply be impossible. The fact of registration must be confirmed by information by letter

Write a request to the territorial body of Rosgosstat, which carries out statistical accounting at the address where your enterprise is registered. In it, state a request to prepare an information letter confirming that your enterprise is included in the Statistical State Register of Economic Entities and operates according to the relevant OKVED codes. As the reason for issuing the letter, indicate one of the reasons listed above.

List the following notarized documents as attachments in your request: a copy of the certificate of OGRN assignment, a copy of the certificate of tax registration and assignment of TIN, a copy of an extract from the Unified State Register of Legal Entities (EGRLE). Be sure to attach these documents to your request.

You should check with your local government office statistics composition of the required package of documents. It may vary depending on the reasons you provided as the basis for requesting the information letter.

In order to receive an information letter, not earlier than after 6 working days, you should appear in the bodies of the State statistics, having a passport and a power of attorney issued in your name, as well as a certificate of registration of the enterprise in the Unified State Register of Legal Entities or its uncertified copy.

Subsidiary

SUBSIDIARY COMPANY

Finance. Dictionary. 2nd ed. - M.: "INFRA-M", Publishing house "Ves Mir". Brian Butler, Brian Johnson, Graham Sidwell et al. Osadchaya I.M.. 2000 .

Subsidiary

A foreign branch of a company that, under the laws of the country in which the branch is located, is an independent legal entity.

Terminological dictionary of banking and financial terms. 2011 .

See what "Subsidiary" is in other dictionaries:

subsidiary- A company controlled by another company, called the parent company. In accordance with Russian law, a business company is recognized as a subsidiary if another (main) business company or partnership, by virtue of ... ... Technical Translator's Handbook

- (subsidiary company) See: group of companies. Business. Dictionary. Moscow: INFRA M, Ves Mir Publishing House. Graham Bets, Barry Brindley, S. Williams et al. Osadchaya I.M.. 1998 ... Glossary of business terms

- (subsidiary) A firm owned or controlled by another firm. There is a wide range of power that subsidiaries can have in decentralized decision-making on issues such as… … Economic dictionary

SUBSIDIARY COMPANY- a company, the controlling stake of which is in the hands of another parent company. The size of the block of shares necessary 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 company, if the latter owns more than 50% of the share capital or if it exercises effective control, which is determined by ... ... Glossary of terms for the examination and management of real estate

SUBSIDIARY COMPANY- - a business company in conditions where “another (main) business company or partnership, by virtue of its 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 COMPANY A corporation controlled by another corporation. Control is secured by the holding of all or part of the voting shares, an intertwined directorate, a lease relationship, or a common interest in the controlling corporation. Many ... ... Encyclopedia of Banking and Finance

Subsidiary- (SUBSIDIARY) A company that is controlled by another company (known as a parent company) ... Finance and stock exchange: glossary 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 the predominant participation ... Wikipedia

Subsidiary- - branch of the head (parent) company, which is under its control. Retains legal independence. In the event of loss or bankruptcy, the parent company is not responsible for the subsidiary ... Commercial power industry. Dictionary-reference

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A subsidiary company is a legally free organization that has the right to control production, supply, development of new technologies, sale of shares, and so on, however, the subsidiary company must give all its income to the parent company, and this company, in turn, allocates funds for the wages of workers , on equipment, production and various expenses. In fact, the state of the subsidiary depends on the financial position of the head office of the parent company.

From a legal point of view, a subsidiary is practically a free entity funded by another company, however, today we see that the parent company has a huge influence on its subsidiary. That is, he changes leaders, putting his people, indicates the path of the downed goods and controls production.

Dear reader! Our articles talk about typical ways to resolve legal issues, but each case is unique.

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Changes in control took place in 1994, until that time the subsidiary, from the legal side, was completely controlled by the parent company only by finances, however, it was in 1994 that a law was adopted that states that a subsidiary, which is also a business company, is a created or a company acquired by another company.

Such a society has the right to dictate the conditions of production, however, at the same time it has a huge dependence on the mother community. As a rule, disagreements never arise between the child and parent communities, because they are directly dependent on each other.

In the event of the bankruptcy of a subsidiary, the parent company must take all the blame for this incident. In the event that the power sees that the financial condition of the main office can fully financially support its subsidiary, then it has the right to force it to do so.

Opening a subsidiary, step by step instructions

To date, opening a child community is not difficult, for this you will need:

1. All documents of the ruling company.
2. Charter of the subsidiary.
3. A legally formalized decision to establish a subsidiary.
4. You will need an application form p11001.
5. It is also very important to have a document that indicates that your company does not have any debt.

There are two ways to create a child community:

Method number 1 instruction

1. To get started, draw up a special charter for the subsidiary and indicate in it all the conditions you need. If the company has several shareholders of the main capital, then you should create an agreement that describes the distribution of shares between them.
2. It is necessary to draw up a protocol among the founders. This protocol must legally confirm the fact of the creation of a subsidiary.
3. When creating any enterprise, including a subsidiary, you need to specify its location and contact details. Such a document has the right to create only the director of the main community, which will continue to control the child.
4. It is worth noting that before registering a subsidiary, you need to get a certificate that indicates that the main office does not have any kind of debt. A subsidiary is registered only when all debts of the parent community are repaid. If the subsidiary incurs losses due to underfunding by the heads of the head office, then through the court, the parent company will be forced to incur losses in favor of its subsidiary.
5. Form p11001 must be completed in full.
6. After all the above documents are executed, the chief accountant is appointed and all the necessary documents are collected, you need to submit all the papers for consideration to the tax authority in which your company is actually registered. After all contracts are ready, the subsidiary company can start its existence.

Method number 2 instruction

There are times when a subsidiary is not created, but assigned by mutual agreement. In the common people, this can be called "Absorption". Everything happens very simply: one company ruins another, after which, for a small amount, it appropriates it for itself. Today, there are a lot of companies that absorb enterprises.

Take, for example, the automotive concern Volkswagen Group, which over the years of its existence has absorbed almost the entire automotive business in Germany and Europe.

The great concern has a well-established scheme, for example, let's take the takeover of the automaker Audi: When Audi experienced financial difficulties at the end of the 20th century, it was kept afloat by the production of only one car, but Volkswagen creates a car of the same class, which is cheaper, more beautiful, more reliable and better in technical characteristics.

Naturally, motorists will buy a Volkswagen product, not an Audi.

Such a scheme is something unprofitable for the absorbing company, however, this contribution completely illuminates Audi, as a result of which it asks for financial assistance from Volkswagen, after which it becomes a subsidiary, to which its directors are placed.

There are many such examples, for example, take the same car industry: today there are three concerns: Volkswagen, Toyota, General Motors. They control 85 percent of the entire automotive world. Few would think, however, almost all well-known brands belong to just these concerns.

Well, whether you are absorbing a company or simply agreed on everything by mutual agreement, you must do the following:

1. To begin with, you should choose the direction of the subsidiary, that is, give detailed instructions for production. It should be noted that the production of a subsidiary may differ from that of the parent community.
2. The subsidiary is an independent entity, however, the rules are still dictated by the parent community, so a detailed charter should be developed regarding the subsidiary community.
3. By law, the company being acquired must have its seal, its bank account, its address, and its registered natural person, so take care of all this.
4. Decide on the choice of director and accountant in the controlled community. Agree with them all agreements regarding profits.
5. You need to contact the govt. Chamber and submit an application with the following documents: A bank statement about your account, official characteristics of the affiliated community officials, the charter you signed, a letter of guarantee in which the address of the affiliated community is indicated, information about the founder must be provided in writing, a certified copy of the act of acceptance - fund transfers, certified copies of payment transactions.
6. The last step is simply to obtain a certificate of registered subsidiary, after the company is registered, it can begin its official duties.

Pros and cons of a subsidiary:

pros

1. The subsidiary does not have to worry about bankruptcy, as the parent company is obligated to pay off any debts of its company.
2. You should not calculate the budget and expenses of the company, because all this responsibility is assumed by the parent community.
3. There is no need to be afraid of competitors, because the parent company is personally worried about them.

Minuses

1. Of course, the main disadvantage is the lack of freedom. A subsidiary must produce what will be imposed on it! No control over supplies, production and finances. With such conditions it is very difficult to develop technically.
2. The entire capital is under the control of the parent community, so it is difficult for you to invest in the development of a subsidiary. The parent community allocates some capital, which is fully distributed.
3. If there are still enterprises under the authority of your parent community, then in the event of their bankruptcy, it must compensate for all losses, so the money will be allocated from the earnings of another subsidiary, which will actually provide several enterprises with its production. But if the bankruptcy is too severe, and it is the office of the parent community that goes bankrupt, then, most likely, the subsidiary will be closed, since there will be no money to finance it. The main salvation will be either sponsors or some other parent company.

tax accounting

A subsidiary company is obliged to pay taxes to the state, however, in the same way as the parent organization sponsors this community. There are cases when a subsidiary company is indebted to the office of the parent company.

In such cases, there are several developments of events, among which:

• the closure of a subsidiary (in the event that the debt is too large);
• reducing the capital of a subsidiary, while the pace of production should not fall;
• debt forgiveness;

The most common option is the third, because the subsidiary does not have its own capital, so all the debt was formed due to underfunding from the parent community.

Forgiveness of the debt of a subsidiary is a legal process that is quite legal and transparent.

What is the difference between a subsidiary and a branch?

A subsidiary is a legal entity, all its actions, such as contracts and various important decisions, must be agreed with the parent company in the form of a deal. A subsidiary may be located exclusively in the region in which its "Mother" is located.

The branch is not a legal entity, it deals only with those cases that the main company does. Due to the fact that the branch is not a legal entity, all transactions are executed on behalf of the main enterprise. It should also be understood that a branch can be located not only in a different region from the main company, but also located on the territory of other states.