In international business, a subsidiary refers to a legal person enterprise of the host country established in accordance with the law with all or part of the shares invested by the parent company. The subsidiary is legally independent from the parent company and has an independent and complete company management organization system, so it has greater independence and certain flexibility in operation.
At the same time, the business activities of subsidiaries should also be controlled by the parent company and obey the needs of the overall strategy and interests of the parent company. However, this control is indirect and positively related to the proportion of equity owned by the parent company.
Relevant regulations:
1. A subsidiary refers to a company whose shares are held by another company or actually controlled by another company through an agreement. Although the subsidiary is controlled by the parent company, it is still an independent enterprise with legal person status in law. Have its own name and articles of association, and carry out business activities in its own name. Its property and the property of the parent company are independent of each other and each is responsible for its own debts.
2. Subsidiaries shall independently bear civil liabilities according to law. Subsidiaries are economically dominated and controlled by the parent company, but legally, subsidiaries are independent legal persons. The independence of subsidiaries is mainly manifested in: having an independent name and articles of association; Having an independent organization; Have independent property, be responsible for its own profits and losses, and conduct independent accounting; Carry out various non-governmental economic activities in its own name; Independently bear all the consequences and responsibilities brought by the company's actions.