What are the advantages of parent company's guarantee for subsidiary company?

The guarantees provided by the parent company for its subsidiaries mainly include guarantee, mortgage and pledge. The economic interests between companies bind the two sides together, so the guarantee is often provided because of its own related economic needs. A subsidiary company has limited liability for debts, and sometimes it may need a guarantee from the parent company. Reporting the performance of subsidiaries to the parent company is limited to production and business activities. Subsidiaries enjoy tax exemption, including tax incentives, and their profits can stay at the headquarters to get additional tax incentives. The parent company guarantees the subsidiary company, so the business activities of the subsidiary company should also be controlled by the parent company according to the overall strategy and interests of the parent company. This kind of control right is indirectly and positively related to the shareholding ratio of the parent company. As a business behavior of listed companies, guarantee is a normal social and economic phenomenon. In practice, the guarantee behavior of listed companies in China often occurs between affiliated enterprises or potential affiliated enterprises. Associated guarantee refers to the guarantee between affiliated enterprises or indirectly affiliated enterprises. The guarantee provided by the parent company to the wholly-owned subsidiary is Item 3, Paragraph 2, Article 16 of the Company Law, and the shareholders or actual controllers of the company provide the guarantee for the company. Shareholders specified in the preceding paragraph or shareholders with dominant actual control shall not vote on the matters specified in the preceding paragraph. Companies can be divided into parent companies and subsidiaries according to their position in control and control relations. 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. They all have legal personality. Its parent company is its subsidiary. Refers to companies that own most of the shares of other companies at home and abroad. The company it controls is called a subsidiary. A subsidiary can also have its own subsidiary, that is, a subsidiary of the parent company. The parent company generally has more capital and stronger economic strength. Implement highly centralized management of subsidiaries and have decision-making power over major business activities such as production and sales, financing, personnel arrangement and profit distribution. The parent company is mainly a monopoly organization, usually a holding company. In international business, a subsidiary refers to a legal person enterprise of the host country whose parent company is legally established all over the world and has invested all or part of its equity. Subsidiaries are independent of the parent company according to law, have an independent and complete company management organization system, and have greater independence and certain operational flexibility.