To understand the difference between a branch and a subsidiary, you can look at the Civil Code. It describes in detail the features and powers of these divisions of the parent company. Before starting to expand its activities, a businessman should figure out which division will be more profitable to open.
Many businessmen do not see the difference between opening a branch, representative office or subsidiary. Meanwhile, it is also very tangible. Before deciding to reorganize the existing production, you should understand the terms and choose the most acceptable form of expansion of activities.
What is a branch of an enterprise?
This word is called a separate division of a legal entity, which endows it with a full range of powers or only a part of it. A branch of an enterprise or organization may be located on the territory of a foreign state. In this case, all aspects of its activities must be coordinated with the legislation of this country, since it may differ significantly from the domestic one.
The branch is included in the unified state register without fail, but at the same time it is not a legal entity. He is fully subordinate to the management of the parent company and exercises his powers only on the basis of a power of attorney. About what a "separate division", a branch and a representative office is, according to Art. 95 of the Civil Code of the Russian Federation. All stages of opening a branch are spelled out in the Civil Code.
What is a subsidiary?
This is a more independent, separate division, which is formed by transferring part of the property of the parent enterprise to the full economic management of the subsidiary. Its founder determines the Articles of Association of the subsidiary and the ownership of the transferred property.
This form of management is beneficial for the head office in that it relieves itself of the obligation to manage the workflow at this facility and is content with receiving basic reports on the work of its subsidiary. The main responsibility for its activities lies with the business executive appointed by the parent company. He is involved in the organization of work, the "promotion" of the unit, in charge of all current operations. But he is obliged to coordinate all the main costs and decisions with the head office.
Thus, we conclude: a subsidiary is a more independent unit, endowed with significantly greater powers by the founder, possessing the property transferred to him on the basis of ownership. The branch has much more limited opportunities both in terms of independent management and document management.
