1. Financial and debt risks: The parent company may be jointly and severally liable for the financial and debt of its subsidiaries. If the subsidiaries are poorly managed or commit illegal acts, the parent company may face financial and debt risks.
2. Legal compliance risk: Although the parent company and subsidiaries have the same legal representative, different legal entities need to abide by relevant laws and regulations respectively. If the subsidiary violates the law or fails to perform relevant obligations, it may have an impact on the reputation and operation of the parent company.
3. Strategy and management risk: The strategy and management of parent company and subsidiary company should be consistent. If the parent company fails to manage and control the subsidiary, the operation of the subsidiary may deviate from the strategic objectives of the parent company, thus affecting the operation of the parent company.
The significance of parent-subsidiary company:
1. Expand scale and market share: By establishing subsidiaries, the parent company can expand business scale and market share. Subsidiaries can operate independently and expand new markets, customer groups or product lines, thus improving the overall income and profitability of the parent company.
2. Diversified risks and diversified operations: The parent-subsidiary structure allows the parent company to spread its business to different subsidiaries, which can reduce the overall operational risks. If the subsidiary encounters difficulties or market changes, it can continue to operate and reduce the impact on the parent company.
3. Optimal allocation of resources: Through the parent-subsidiary structure, the parent company can better manage and allocate resources. The parent company can allocate capital, manpower and technical resources according to the needs and priorities of its subsidiaries, so as to ensure the strategic objectives and operating benefits of the whole group are maximized.
4. Brand building and market influence: subsidiaries can use the brand reputation and market position of the parent company to establish their own brand image and market influence. This can help subsidiaries gain customer trust, market recognition and competitive advantage more quickly.
5. Flexibility and innovation: The parent-subsidiary structure provides organizations with greater flexibility and innovation. Subsidiaries can focus more on specific markets, products or services, and can quickly adapt to market changes and customer needs. At the same time, the parent company can gain new growth points and competitive advantages through the innovation activities of its subsidiaries.
To sum up, the parent-subsidiary structure is of great significance in enterprise and organizational management, which helps to expand the scale, spread risks, optimize resource allocation, brand building and improve flexibility and innovation.
Legal basis:
Company Law of the People's Republic of China
Article 13
The legal representative of the company shall be the chairman, executive director or manager in accordance with the articles of association, and shall be registered according to law. Where the legal representative of the company changes, it shall go through the registration of change.