Branches have no independent legal personality, but subsidiaries do. The contents of the industrial and commercial registration of enterprises in the Administration for Industry and Commerce are different, which is embodied in the capital contribution. A subsidiary is an independent legal person, with its own independent name, articles of association and organization, and carries out activities in its own name, and the creditor's rights and debts incurred in the course of operation are independently borne by itself. The branch does not have the qualification of enterprise legal person and has no independent name. Its name should be preceded by the name of the affiliated company, which is established according to law and is only a branch of the company.
The differences between branches and subsidiaries are as follows:
1, established in different ways. A subsidiary is generally established by two or more shareholders, including the company, in accordance with the provisions of the Company Law. When a company establishes a branch, the head office generally applies to the local industrial and commercial authorities outside its domicile for a business license, and the name of the branch is always the branch.
2. Different legal status. A subsidiary has the status of a legal person, has an independent name, articles of association and organization, engages in business activities in its own name, can independently carry out various business activities and engage in various civil activities within its own business scope, and independently bear all consequences and responsibilities brought about by the company's actions. However, major decisions or major personnel arrangements involving the interests of the company must still be decided by the parent company. Branches are established by the head office at the request of the local industrial and commercial departments outside the domicile. It belongs to the branch of the head office and has no legal personality, independent name, articles of association and organization. Although it can carry out business activities independently, it must engage in business activities in the name of branches of the head office and only within the scope authorized by the company.
3. Different control methods. Generally speaking, the parent company does not directly control its subsidiaries, but mostly adopts indirect control, that is, it affects the production and business activities of subsidiaries through investment decisions and the appointment and dismissal of board members of subsidiaries. Branches are not. Their property, business and personnel are directly controlled by the head office and can only engage in business activities within the business scope of the head office.
There are different ways to assume debt responsibility. A subsidiary has the status of a legal person and is liable for the debts arising from its business activities with all its property. Not only does the branch company have no independent property, but it also has to do unified financial accounting with the head office. The head office must pay off the debts incurred by the branch company in its business activities with all its property;
5. The legal effect in litigation is different. Factoring company is an independent legal person, and its subsidiaries only need to bear civil liability within the scope of their own assets. Except for investors (i.e. shareholders of subsidiaries) who make false capital contributions or withdraw funds after making capital contributions, some investors who cannot pay off do not need to bear any additional responsibilities. When a branch company is not an independent legal person and fails to perform its debts in the course of business development, the creditor may demand the head office to bear the repayment obligation, or directly take the head office as the defendant and demand it to bear the responsibility in the lawsuit.
To sum up, a subsidiary is not a branch. A subsidiary is a company with independent legal personality, independent property, and the ability to independently exercise rights and bear legal responsibilities. However, the branch is only a branch of the head office and has no independent legal person status, so it has no independent property and cannot independently exercise its rights and undertake its obligations.
Legal basis:
Article 14 of the Company Law of People's Republic of China (PRC)
Companies can set up branches. The establishment of a branch company shall apply to the company registration authority for registration and obtain a business license. A branch company does not have legal person status, and its civil liability shall be borne by the company.
A company may set up subsidiaries, which have legal personality and independently bear civil liabilities according to law.