1. The subsidiary can conduct independent and complete accounting, and the loss will not offset the profit of the parent company.
2. The establishment of subsidiaries by an enterprise group can greatly develop the business areas that need to be developed in the long-term strategy of the group company, make the whole group stronger and bigger in these areas, and thus enhance the core competitiveness of the group.
3. At the same time, by establishing the independent legal person status of subsidiaries, the operating risks of subsidiaries can be effectively limited to a certain range, and the group company only bears the risks within the scope of capital contribution, and will not suffer greater losses because of the mistakes of subsidiaries, and will not infringe on the interests of other business departments and other subsidiaries of the group company.
4. On the other hand, through their own efforts, subsidiaries form intangible assets such as goodwill and brand in the business field, which is helpful to enhance the overall image of enterprise groups.
Disadvantages of setting up a subsidiary:
1. Setting up a subsidiary with independent accounting in other places requires a lot of procedures, which are complicated and expensive.
2. The requirements are relatively high, and the establishment of subsidiaries must meet the conditions and procedures stipulated in the Company Law and the Regulations. Only companies authorized by the state can invest in the establishment of wholly-owned subsidiaries (that is, wholly state-owned subsidiaries). Other companies can only set up holding subsidiaries in the form of limited liability companies or joint stock limited companies.
3. The operating risk of the company's initial establishment of subsidiaries is relatively high.
4. Subsidiaries are fully obligated to pay taxes, and they need to pay income tax independently, and the tax level they undertake is relatively high.
5. If the company invests in other limited liability companies or joint stock limited companies, and the articles of association stipulate limits on the total amount of investment or guarantee and the amount of individual investment or guarantee, it shall not exceed the prescribed limits.
Extended data:
Conditions for establishing a subsidiary:
1. The shares meet the statutory qualifications and the number limit:
As the sole investor (shareholder), the state may establish a wholly state-owned company; Companies and individuals, including rural villagers, resigned and resigned personnel; Retirees and other members, private entrepreneurs and individual industrial and commercial households permitted by national laws, regulations and policies may become shareholders of a limited liability company. The number of shareholders of a limited liability company shall be prescribed by law, ranging from two to fifty.
2. Shareholders * * * make the same contribution and reach the minimum legal capital:
The capital contribution of the shareholders of a limited liability company can be in cash, or in kind, industrial property rights, non-patented technology and land use rights. The investment in kind must be discounted, and the state-owned assets management department shall conduct accounting and confirmation, and handle the legal procedures for property transfer. Industrial property rights and non-patented technology are used as capital contribution, and the price is fixed, and the capital contribution shall not exceed 20% of the registered capital.
If the land use right is used to invest in shares, the investment price must be evaluated by the land management department of the civil affairs government at or above the county level, reported to the people's government at or above the county level for examination and approval, and the corresponding land use certificate shall be handled.
Since the State Council announced the cancellation of the minimum registered capital of the company, the proportion of initial capital contribution by shareholders (promoters) and the time limit for full capital contribution were no longer limited when the company was established. However, the establishment of a subsidiary still needs the funds needed for business activities.
3. Shareholders * * * jointly formulate the Articles of Association:
The establishment of the articles of association is an important condition for the establishment of a company and a necessary procedure for the establishment of a limited liability company. The articles of association of a limited liability company is the basic provisions on the organization and operation of the company agreed by all shareholders, and it is a document to determine the rights of the company.
4. Having a company name that meets the legal requirements and establishing an organization that meets the requirements;
To establish a limited liability company, the words "limited liability company" must be marked in the company name, and shareholders shall bear limited liability to the extent of their capital contribution. Company institutions include shareholders' meeting, board of directors and board of supervisors. At the same time, there must be corresponding management institutions and responsible persons.
5, in line with the provisions of the business scope:
Where the business scope involves pre-licensing, the relevant pre-licensing or approval shall be handled first.
6. Registration of institutions:
After the articles of association are completed and the shareholders have fully contributed their capital, the company shall apply to the company registration authority for registration of establishment within the statutory time limit, and the representative designated by all shareholders or the agent entrusted by all shareholders shall submit the application for company registration.
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