2. Derivation and separation. That is, the legal subject of the original company still exists, but part of the business is set aside to set up a new company.
Due to the separation mode, the company continues to exist but the registered capital is reduced. The proportion of shares of the original shareholders in the company and the new company can remain unchanged. In practice, in order to expand assets and reduce investment risks, the head office often reorganizes its branches into wholly-owned subsidiaries with legal personality. At this time, the head office is also transformed into the parent company. The parent company is only responsible for the debts of the newly established subsidiary to the extent of its investment.