According to the relevant laws and regulations, the company can set up subsidiaries, which have independent legal personality and independently bear civil liability according to law. After the debt occurs, the liability should be limited to all the assets of the subsidiary, so the subsidiary cannot sue the debt of the parent company.
The links and differences between subsidiaries and parent companies are as follows:
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 right 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. If a company owns more than 50% of the shares of another company, it can actually control the company;
3. The parent company and subsidiaries are independent legal persons. Although the subsidiary is actually controlled by the parent company, it is an independent legal person in law, engaged in business activities in its own name and independently bears civil liability. Subsidiaries have their own articles of association, 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 ground
Company Law of the People's Republic of China
Article 14 A company may set up branches. The establishment of a branch company shall apply to the company registration authority for registration and obtain a business license. A branch company does not have legal person status, and its civil liability shall be borne by the company.
A company may set up subsidiaries, which have legal personality and independently bear civil liabilities according to law.