1. Branches.
A branch office is a branch of the parent company and usually does not have a separate legal personality. A branch office usually carries out business activities within the scope of the parent company's authorization and is subject to the management and control of the parent company. Due to the lack of a separate legal personality, the debts and liabilities of a branch office are usually borne by the parent company.
Features of the branch include:
1.The business activities are managed and controlled by the parent company;
2.does not have a separate legal personality;
3.Usually carry out business activities within the scope of the parent company's authorization;
4.Debts and liabilities are borne by the parent company.
2. Subsidiary.
A subsidiary is an independent legal person with independent legal personality. The parent company owns part or all of the equity of the subsidiary through equity or other means, but the subsidiary itself has an independent management system and operating model. Parent companies typically diversify or diversify investment risk through subsidiaries.
Features of the subsidiary include:
1.Independent legal person, with independent management system and operation model;
2.The parent company owns part or all of the equity in the subsidiary, whether through equity or otherwise;
3.The subsidiary incurs its own debts and liabilities;
4.It is often used for diversification or diversification of investment risk.
3. Differences between branches and subsidiaries.
There are clear differences between branch and subsidiary offices in many ways. Here are some of the key differences between the two:
1.Legal personality: A branch office does not have an independent legal personality, while a subsidiary company has an independent legal personality.
2.Management structure: Branch offices are usually strictly managed and controlled by the parent company, while subsidiaries have relatively independent management systems and operating models.
3.Debts and liabilities: The debts and liabilities of a branch office are usually borne by the parent company, while the subsidiary takes on its own debts and liabilities.
4.Investment purpose: The parent company usually diversifies or diversifies investment risks by setting up a subsidiary, while a branch office is set up more to facilitate management and control.
5.Tax policy: A branch office is usually taxed on a consolidated basis with the parent company in terms of taxation, while a subsidiary is taxed independently.
6.Independence: A branch office does not have the status of an independent legal entity, whereas a subsidiary has the status of an independent legal entity and can independently participate in civil activities and bear civil liability.
7.Shareholding structure: The parent company usually owns all or part of the equity of the subsidiary, while the shareholding structure of a branch office is simpler and is usually held by the parent company.
8.Corporate governance structure: A subsidiary company has an independent governance structure, including a shareholders' meeting, a board of directors and management, while a branch company does not have an independent governance structure and is managed and controlled by the parent company.
9.Operational risk: Since the subsidiary has an independent legal personality, its operational risk is borne by itself, and the parent company bears limited joint and several liability for the debts and liabilities of the subsidiary. The operating risk of the branch is borne by the parent company.
10.Business scope: A branch office is usually restricted by the parent company in terms of business scope and can only carry out business activities within the scope authorized by the parent company. Subsidiaries have a relatively independent business scope and can carry out business activities independently.
To sum up, branch offices and subsidiaries play different roles in the corporate structure with many differences. Understanding the concepts, characteristics, and differences between branch and subsidiary offices can help you better understand your company's organizational structure and operating model.
February** Dynamic Incentive Program