The subsidiary is legally independent from the parent company and has an independent and complete company management organization system, so it has greater independence and certain flexibility in operation.
At the same time, the business activities of subsidiaries should also be controlled by the parent company and obey the needs of the overall strategy and interests of the parent company. However, this control is indirect and positively related to the proportion of equity owned by the parent company.
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Matters needing attention
As far as organizational forms are concerned, foreign-funded enterprises can be legal persons or non-legal persons. A foreign-funded enterprise with legal personality has obtained legal personality according to law, and its organizational form is generally a limited liability company. The liability of foreign investors to the enterprise is limited to the amount of their subscribed capital contribution.
A foreign-invested enterprise that does not form a legal person organization may be established in China by two or more foreign legal persons or natural persons in the form of partnership and individual proprietorship, and its legal basis shall be governed by the provisions of the General Principles of the Civil Law on individual partnership and joint venture.
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