Proof of the relationship between parent company and subsidiary company

Legal analysis: 1. Concept: A parent company refers to a company that owns more than a certain percentage of shares in another company or can actually control another company through an agreement. Having the qualification of a legal person and being able to bear civil liability independently. Subsidiary is a legal concept corresponding to the parent company, which refers to a company whose shares are held by another company or actually controlled by another company through an agreement. A subsidiary company has the status of a legal person and can bear civil liability independently.

2. Contact and difference.

(1) The subsidiary is actually controlled by the parent company. The parent company has the actual decision-making power on major issues of its subsidiaries, can decide the composition of the board of directors of its subsidiaries, and can directly exercise the power to appoint directors of the board of directors.

(2) The relationship between parent company and subsidiary company is based on the agreement of share possession or control. Generally speaking, shareholders with more shares have greater decision-making power over company affairs. Therefore, if a company owns more than 50% of the shares of another company, it can actually control the company. In practice, the shares of most companies are scattered, and as long as they have more than a certain proportion of shares, they can obtain a controlling position. In addition to controlling shares, a company can also control another company by concluding some special contracts or agreements.

(3) The parent company and subsidiaries are independent legal persons. Although subsidiaries are actually controlled by the parent company, restricted and managed by the parent company in many aspects, and some of them are actually similar to the branches of the parent company, legally speaking, subsidiaries belong to independent legal persons, engage in business activities in their own names and independently bear civil liabilities.

(4) subsidiaries have their own articles of association, including the board of directors and other corporate decision-making bodies. A subsidiary has its own independent property, and the property it actually occupies and uses belongs to the subsidiary and has its own balance sheet. The subsidiary and the parent company shall bear their respective responsibilities to the extent of their own property and shall not be related to each other. As the largest shareholder of the subsidiary, the parent company is only responsible for the debts in the operating activities of the subsidiary to the extent of its capital contribution to the subsidiary. To set up a subsidiary, an application must be made in strict accordance with the requirements for setting up a company, and business can be started only after obtaining a business license and going through relevant formalities according to law.

Legal basis: People's Republic of China (PRC) Company Law.

Article 175 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 176 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.