There are two basic ways to divide a company:
1, new division. That is, the original company's legal person qualification is eliminated, and more than two new companies with legal person qualifications are established.
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 shall bear corresponding legal responsibilities for the debts of the newly established subsidiary only to the extent of its capital contribution.
Legal basis: People's Republic of China (PRC) Company Law.
Article 176 When a company is divided, its property shall be divided accordingly. When the company is divided, it shall prepare a balance sheet and a list of assets. The company shall notify the creditors within 10 days from the date of making the resolution of separation, and make an announcement in the newspaper within 30 days.
Article 177 The debts of the company before division shall be jointly and severally liable by the company after division. However, unless the company and creditors reach a written agreement on debt settlement before division.
Article 180 Where a company is merged or divided and its registered items change, it shall register the change with the company registration authority according to law; If the company is dissolved, it shall go through the cancellation of registration according to law; Where a new company is established, it shall be registered in accordance with the law. Where a company increases or decreases its registered capital, it shall register the change with the company registration authority according to law.