Benefits of establishing a subsidiary:
1. The subsidiary can conduct accounting independently and completely, and the losses will not be offset by the profits of the parent company.
2. The establishment of subsidiaries by enterprise groups can enable the business areas that need to be focused on development in the long-term strategy of the group company to achieve substantial development, so that the entire group can become stronger and bigger in these areas, thus strengthening the core competition of the group. ability.
3. At the same time, by establishing the independent legal person status of the subsidiary, the operating risks of the subsidiary can be effectively limited within a certain range. The group company will only bear risks within the scope of its capital contribution and will not If you make a mistake and suffer more losses, it will not harm the interests of other business departments and other subsidiaries of the group company.
4. On the other hand, subsidiaries form intangible assets such as goodwill and brand in their business fields through their own management efforts, which help enhance the overall image of the enterprise group.
Disadvantages of establishing a subsidiary:
1. To establish an independent accounting subsidiary in other places, you need to go through many procedures, the establishment process is complicated, and the start-up costs are also high.
2. The requirements are relatively high. The establishment of a subsidiary should comply with the conditions and procedures stipulated in the "Company Law" and "Regulations". Only companies authorized by the state to invest can invest to establish wholly-owned subsidiaries (that is, wholly state-owned subsidiaries). Other companies can only establish holding subsidiaries in the form of limited liability companies or joint-stock companies.
3. The business risks of establishing a subsidiary in the early stage of a company are relatively high.
4. Subsidiaries bear full tax obligations and need to pay income tax independently, and the tax level they bear is relatively high.
5. If the company invests in other limited liability companies or joint-stock companies, if the company's articles of association stipulate limits on the total amount of investment or guarantee and the amount of individual investment or guarantee, the prescribed limit shall not be exceeded.
Extended information:
Conditions for establishing a subsidiary:
1. The shares meet the legal qualifications and the limited number of people:
The state is the sole Investors (shareholders) can establish wholly state-owned companies; companies, individuals, including rural villagers, resigned and retired personnel; retirees and other members permitted by national laws, regulations and policies, private business owners and individual industrial and commercial households can Become a shareholder in a limited liability company. The number of shareholders of a limited liability company is stipulated by law, and it must be between two and fifty shareholders.
2. Shareholders must contribute capital together and reach the minimum limit of statutory capital:
The capital contribution of shareholders of a limited liability company can be in currency, or in kind, industrial property, or non-patent Technology, land use rights. Contributions in kind must be made at a discount, and must be accounted for and confirmed by the state-owned assets management department, and legal procedures for transferring property must be completed. The amount of investment made in the form of industrial property rights and non-patented technology shall not exceed 20% of the registered capital.
For capital contribution with land use rights, the valuation of the investment must be organized and evaluated by the land management department of the people's government at or above the county level, and reported to the people's government at or above the county level for review and approval, and the corresponding land use certificate must be obtained.
Since the State Council announced the cancellation of the company’s minimum registered capital, it will no longer limit the proportion of initial capital contribution by shareholders (promoters) when the company is established and the period for full capital contribution. However, the establishment of a subsidiary still requires the necessary funds for operating activities.
3. Shareholders must jointly formulate articles of association:
Entering company articles of association is a prerequisite for establishing a company and an indispensable procedure for establishing a limited liability company. The articles of association of a limited liability company are the basic provisions regarding the organization and operation of the company agreed by all shareholders, and are a document that determines the rights of the company.
4. It is necessary to have a company name that complies with legal provisions and establish an organizational structure that meets the requirements:
When establishing a limited liability company, the words "limited liability company" must be marked in the company name. Shareholders have limited liability limited to the amount of their capital contribution. Corporate institutions include the shareholders' meeting, the board of directors and the supervisory board. At the same time, there must also be corresponding management agencies and responsible persons.
5. Business scope that meets regulations:
If the business scope involves pre-licensing, relevant pre-licensing or approval must be obtained first.
6. Registration of establishment:
After the company's articles of association are formulated and shareholders have paid in full, the company shall, within the statutory period, be appointed by representatives or *** concurred by all shareholders. The entrusted agent applies for establishment registration to the company registration authority and submits a company registration application form.
Baidu Encyclopedia-Subsidiaries