The parent company refers to the head office that is headquartered in the home country and effectively controls overseas economic entities through foreign direct investment in international business. Most of the parent companies of multinational corporations are established by the capital of one country, but in a few cases, they may be jointly established by the capital of two or more countries.
2. Different independence
Although the subsidiary is under the actual control of the parent company, it is restricted and managed by the parent company in many aspects, but it is an independent legal person in law, engaged in business activities in its own name and independently bears civil liability. Subsidiaries have their own articles of association, board of directors and other corporate decision-making bodies.
3. Different status
Companies can be divided into parent companies and subsidiaries according to their different positions in the relationship between control and controlled. The company that actually controls other companies is the parent company, and the company that is actually controlled by other companies is the subsidiary company.
Legal basis: Branch companies can be established in Article 14 of People's Republic of China (PRC) Company Law. 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.