Features of registering a company that is classified as a subsidiary

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What is the difference between a subsidiary and a branch? Such a society has the right to dictate the conditions of production, however, at the same time it has enormous dependence on the maternal community. As a rule, disagreements never arise between the daughter and mother communities, because they directly depend on each other. In the event of bankruptcy of a subsidiary, the parent company must bear all the blame for this incident. If a power sees that the financial condition of the head office can fully financially support its subsidiary, then it has the right to force it to do so.

What is the difference between a subsidiary and a branch? The latter actually ensures the activities of the organization and controls it. Let's consider the advantages of a subsidiary: All debts of the subsidiary are repaid by the parent organization. All financial responsibility rests with the main company. The parent company must also provide a competitive advantage. However, a subsidiary also has disadvantages: Lack of freedom to choose the production direction and other basic aspects of activity.

Creation of a subsidiary

Such documents may be an extract from the register of foreign legal entities of the relevant country of origin or other proof of equal legal force of the legal status of the foreign legal entity, sub. In addition, before submitting documents for registration, you will need to check with the inspectorate whether the available documents are sufficient and whether they are drawn up correctly.

Finally, it makes sense to prepare all documents related to a foreign company in several copies at once. The necessary copies are submitted for registration, and additional copies are left in case a decision is made to refuse registration and the documents have to be resubmitted.

Otherwise, when collecting documents again, it may be necessary to go abroad to get them, since if a decision is made to refuse, the documents submitted for registration are not returned to the applicant. This list is exhaustive and the tax office does not have the right to require the submission of other documents. In the case of creating an LLC as a result of reorganization, special procedures and requirements must be observed.

For more information about this, see. Moreover, the tax inspectorate does not have the right to check the form and content of the submitted documents, with the exception of the application for state registration, for compliance with the legislation of paragraph. However, in practice, the specified documents are often not enough, in this regard, it is recommended to submit additional documents. The same order approved the Requirements for the preparation of documents submitted to the registration authority, which must be observed when filling out the application.

Misprints and inaccuracies in the application are one of the most common reasons for refusal of state registration. When filling out the application, you need to be extremely careful and check it several times - both for compliance with the data specified in other documents, and for compliance with the requirements for its completion.

The authenticity of the applicant's signature on the application must be certified by a notary. This will not be required if: the applicant submits documents in person and presents a passport or other identification document; documents will be submitted electronically and signed with an enhanced qualified electronic signature of the applicant. Such rules are established in paragraph 1. If an LLC is created by a single founder, the decision is formalized in the form of a decision of the sole founder to create an LLC.

If the decision is made by several founders, then it is necessary to hold a vote and formalize its results. Otherwise, the inspection may refuse registration. In this case, decisions on the following issues must be unanimously adopted. In the event that by the time a decision is made on these issues, the size of the share of each of the founders has not been determined, each founder has one vote when voting.

Advice If an LLC is established by several founders, before submitting documents for registration, you must check with the relevant tax office whether it will be sufficient for registration to submit only the decision to create the LLC without an agreement on its establishment. Typically, advice from authorized inspection staff can be trusted. But it must be taken into account that such an unofficial response will only have an informative value and in case of refusal of registration, referring to it will be useless.

For state registration, the charter is submitted in two copies; this requirement is established in Article 12 of the Law on State Registration. One copy remains with the tax authorities in the registration file, and the second is issued to the applicant with the necessary marks from the tax office. Advice Before submitting documents for registration, you must check with the relevant tax office how many copies of the charter need to be submitted in the original and how many in copies. The inspection management may establish a requirement to submit a copy of the charter instead of the second original.

If such a requirement is not met, the documents may not be accepted for registration or a decision may be made to refuse state registration.

Such a requirement from the inspection management is usually not published anywhere and you can only find out about it from the inspection staff. Such demands from tax authorities are illegal, but challenging a decision to refuse registration can take a month or more. Document confirming payment of the state duty. For registration of a legal entity, you will have to pay a state duty in the amount of rubles.

Details for payment can be found in the relevant tax office or on the official website of the Federal Tax Service of Russia. The payer will be the person authorized by the founders in the decision to create an LLC for state registration or the sole founder. Tax legislation establishes that payers are organizations and individuals who apply for legally significant actions.

The fee is paid at the place where the legally significant action was performed. Payment can be made in cash or non-cash form. In this case, the supporting document does not need to be submitted to the inspection. This is indicated by the Russian Ministry of Finance in paragraph In this case, the tax service may request information about the payment of the duty in the State Information System on State and Municipal Payments GIS GMP. This provision is based on paragraph 2 of part 1 of article 7 of the Federal Law of July 27.

Thus, if you do not submit a document confirming payment of the duty, this will not become a basis for refusal to register the item. If desired, the fact of payment of the state duty in non-cash form can be confirmed by a payment order with a note from the bank about its execution; in cash - a receipt of the established form issued by the bank Art.

Incorrect indication of the basis for payment or payer may result in refusal of registration. Particular attention should be paid to specifying payment details. In particular, incorrect indication of the BCC code indicates improper fulfillment of the duty payment obligation and becomes grounds for refusal of registration. Conflicting judicial practice has developed on the issue of paying state fees and issuing payment documents.

To avoid disputes, the payment document must indicate that the state fee is paid for registering a specific LLC upon creation.

Creation methods, their pros and cons

Lawyers distinguish two main ways to create a subsidiary: establishing a new organization or spinning it off during reorganization .

First way . Each procedure has both its pros and cons. The obvious advantage of creating a new LLC is, first of all, the timing. It takes on average about a week to register a new company. At the same time, the reorganization procedure takes an average of 3-4 months. It should be remembered that the reorganization is considered completed from the moment of state registration of the subsidiary community. Due to the fact that the terms of the reorganization are quite long, a problem arises with the transfer act because During the 3-4 months that elapse from the moment the application is submitted to the Federal Tax Service and until the corresponding entry is made in the unified state register of legal entities, the composition of the property may change significantly, some of the property may be lost, damaged or even sold. In this regard, the entire reorganization procedure may be declared invalid. In addition, while one reorganization procedure is being carried out, in the form of a spin-off, there is no possibility of carrying out another reorganization. And when creating a company, there are no restrictions; you can simultaneously register several new subsidiary companies, with the participation of the parent company in them.

It should also be remembered that when reorganizing a company, it is necessary to notify creditors about the reorganization procedure itself, and creditors can either prevent the reorganization procedure or demand early fulfillment of obligations. While it is impossible to prevent the creation of a new society.

The second creation method is the most popular in the Russian Federation. But the choice of one method or another depends primarily on the operating conditions of the enterprise and the goals it strives for. For example, a legal entity has a share of assets that are highly liquid and which need to be transferred to a subsidiary. In this case, it would be more expedient to create a subsidiary by forming a new legal entity, because If a subsidiary is created through a spin-off, the transfer of such assets may be invalidated due to the relationship between the parties.

Our specialists will help you choose the right way to create a subsidiary. We are ready to analyze the activities of your company and present the most profitable plan for creating a subsidiary.

The concept of a subsidiary company and step-by-step instructions for opening it

Summing up the half-year results The decision to create a subsidiary is made within the organization, as a rule, if necessary, to concentrate production on the most core areas to increase competitiveness and develop new markets. In addition, individual business units react more flexibly than branches to the rapidly changing situation on the market for a particular product. For example, in the year Hitachi AC Systems decided to create a subsidiary, Hitachi Industries Refrigeration-Heating Division, to separate the production of industrial heating and air conditioning systems from its main business. In Russian practice, the creation of subsidiaries is also widely used in order to increase competitiveness and effective capital management. The issue of creating subsidiaries is especially relevant for large business entities. The existing experience allowed the author to analyze the most significant legal aspects of creating subsidiaries, the pros and cons of various methods, and offer readers practical recommendations. Two ways to create subsidiaries The company is considered created from the moment of its state registration, namely from the moment the corresponding entry is made in the Unified State Register of Legal Entities. Russian civil legislation provides that a company can be created in two ways - reorganization of an existing company, including in the form of a spin-off, or the establishment of a new one 3. The most common way to create subsidiaries is to spin them off during the reorganization of legal entities. This is primarily due to the fact that with this method of reorganization one or more subsidiaries are created without terminating the activities of the reorganized company, in contrast to reorganization in the form of division, in which the activities of the reorganized company are terminated.

Creating and registering an LLC yourself - step-by-step instructions Attention! To develop all the necessary documents and create a turnkey LLC, please contact us!

Alexander Perekatov: Holding or branch network, which is better?

Alexander Perekatov

When we are talking about combining the assets of several legal entities, also located in different regions, into one legal entity, that is, when assets are acquired in different regions for the purpose of regional development of a business

, then the question always arises: what is better: to buy shares in the authorized capital of these legal entities and thus create a holding company with subsidiaries, or to create a branch network based on the acquired regional assets, subsequently getting rid of shares in legal entities whose assets will be transferred to newly created branches. In this case, we will talk about the situation when assets are acquired not through the purchase and sale of property from one legal entity to another, but when property is acquired by establishing control over the legal entity that owns the property through the acquisition of shares in its authorized capital. Of course, in each individual case the decision must be made individually, but this problem has its own pros and cons that are common to all situations, which should be taken into account when deciding how assets should be integrated into the structure of the acquiring organization.

Let's look at the main advantages and disadvantages of each option.

Creation of a branch network based on acquired regional assets

In accordance with the law, a branch is a separate division of a legal entity located outside its location and performing all or part of its functions, including the functions of a representative office. The branch must maintain its own separate balance sheet and “report” with it to its local tax office, that is, to the tax office with which it is registered, pay local and regional, if the branch is located in another region, taxes and fees

. The procedure for such a “report” is as follows: the branch provides its balance sheet to the parent organization, which, with its stamp, sends it to the tax office at the place of registration of the branch, simultaneously entering the balance sheet data into its consolidated statements.

When organizing accounting in an organization where there are branches, it is necessary to take into account that accounting and tax reporting is prepared both for the branches and the parent organization separately, and for the entire legal entity, including branches. Reporting that includes aggregate indicators for the entire legal entity together with its branches is called consolidated reporting. For this reason, it is optimal for any branch to have a qualified accountant to competently prepare its tax and accounting reports, since, as a rule, due to the territorial remoteness of the branch, it is practically impossible to check and correctly prepare such reports in the parent organization due to the constant need to control specific transactions occurring directly at the branch's place of work in order to correctly reflect their reporting.

As an advantage of a branch compared to a subsidiary, it is important to note the fact that the presence of a financial manager at each branch is not required; it is enough to have one manager who will organize work at all branches and periodically monitor it. At the same time, the availability of managers and their number will depend on the degree of freedom of activity of the branches, which can be established by the parent organization in the regulations on each branch.

Another advantage of the branch network is that when paying taxes

and fees, it is necessary to proceed from the fact that the branch itself, as a separate unit, is not a payer of taxes and fees, but only fulfills the obligation of the main organization (legal entity) to pay them (Article 19 of the Tax Code of the Russian Federation). All federal taxes, as well as regional ones, if the branch and the main organization are located in the same region, can be paid not by the branch, but by the main organization according to consolidated reporting.

It is necessary to note one of the main differences between branches and subsidiaries in the field of taxation: when moving goods between branches and the parent organization, there is no time for the sale of products and, accordingly, there is no time for payment or accrual of all taxes accompanying the sale, i.e. the procedure for moving marketable products from the head office organization to a branch and between branches is much simpler than the same movement, but in the presence of subsidiaries. This fact can be both an advantage and a disadvantage for different business building models, as well as when using different taxation systems. However, in most cases, the absence of the need to formalize the sale when moving inventory still simplifies and facilitates such movement.

Also, as another advantage of the branch network, it can be pointed out that control by the tax inspectorate over the activities of the branch is much softer than over the activities of a subsidiary, which is a separate legal entity, since the branch itself is not independent and, by monitoring its activities, the tax inspectorate makes, for example, a decision on if held accountable for non-payment of taxes and fees, it must forward this data to the tax office at the place of registration of the parent organization, and only there, based on the data from the consolidated statements, will the final decision be made.

As an organizational aspect of the problem of creating a branch on the basis of existing regional assets, it can be noted that when carrying out the entire procedure of transition from a separate legal entity to a branch, one of the most optimal solutions may be the parallel work of the newly opened branch and the legal entity whose assets are transferred to it, that is, a branch opens before the liquidation of a legal entity, while all the property of the legal entity is sold to the parent organization, which immediately transfers it to the branch, all employees are transferred to the newly opened branch, some of the employees (as necessary) are hired to work part-time for the legal entity to ensure its normal activity and the normal process of its elimination. This procedure is the most optimal, since when organizing activities in a new location, you will have to renew contracts with natural monopolists in order for them to provide services to the branch, etc.

Another advantage is the ability to adjust personnel issues in accordance with the needs of the new employer. To simplify the procedure for dismissing employees who are not suitable for further work for one reason or another, one of the options for their dismissal may be the following:

All employees leave the legal entity upon transfer to a new branch.
Some employees are hired part-time for the legal entity being converted into a branch.
When transferred to a branch, new labor contracts are concluded with all employees (possibly with a probationary period)
According to new contracts drawn up as required by the employer, it is possible to dismiss employees with whom the employer does not plan to continue their employment relationship.

However, with all the advantages of a branch, the option of creating a branch network also has disadvantages. One of the most important disadvantages is that instead of simply purchasing a share in the authorized capital of a legal entity (subsidiary), you will have to create a branch and “drag” the acquired assets into it. This is always a very labor-intensive process, but practice shows that sometimes the control capabilities that the presence of a branch, and not a subsidiary, guarantees, are more important than all the difficulties that may arise when creating a branch.

Creation of a holding based on subsidiaries

Creating a network of subsidiaries by purchasing and selling shares in a subsidiary from one person to another is much simpler and less painful than creating a branch.

This process includes the execution of a share purchase and sale transaction by concluding a share purchase and sale agreement and state registration of changes in the company’s constituent documents related to changes in the structure of the authorized capital.

From an organizational point of view, the construction of such a relationship scheme implies a relationship between two legal entities, when one of them is indirectly or directly dependent on the other in its decisions. However, if in the case of a branch such dependence is expressed directly in the instructions and powers contained in the Regulations on the branch, then in the case of subsidiaries, such dependence, and, accordingly, control, is much less. This state of affairs can become a serious obstacle when deciding to conduct business in the regions through subsidiaries and tip the scales towards the creation of branches if it is necessary to create a rigid vertical of power in the corporate structure.

As one of the main disadvantages of such a structure for organizing relationships, the problem of free movement of property from one organization to another should be noted, since any such movement will be regarded from the point of view of tax legislation as a sale with its subsequent taxation

VAT,

income
tax taxes
and fees.
The Tax Code provides the opportunity to transfer property from one organization to another free of charge if the transferring or receiving party owns more than 50% in the authorized capital of the counterparty (clause 11, clause 1, article 251 of the Tax Code of the Russian Federation), however, such a transfer contradicts the norms of the Civil Code of the Russian Federation, which prohibits gifts between commercial organizations in the amount of more than 5 minimum wages (Article 575 of the Civil Code of the Russian Federation), although the tax inspectorate most likely will not pay attention to the Civil Code of the Russian Federation in this case, since in their actions they must first of all be guided by tax legislation. In the case of such a gratuitous transfer, the receiving party will not pay tax
on the gratuitously received property, money, etc., unless such property (except money) is sold by the receiving party within a year from the date of its receipt. But at the same time, the transferring party, in case of a gratuitous transfer, will be charged VAT on sales in the amount of the book value of the transferred property, if their turnover is subject to VAT. Thus, this scheme for transferring property is suitable only in the case of investing money in subsidiaries or receiving money from subsidiaries, as well as when moving property between the parent organization and the subsidiary, the sale of which is not subject to VAT.

Among other things, when choosing one of the options, it is important to understand the fundamental difference between a subsidiary and a branch. This difference arises from the fact that the branch is not a legal entity and its powers are vested from scratch, that is, the branch has only those powers that are granted to it by the parent organization. In the case of a subsidiary that is a legal entity, the opposite is true. Initially, he has the full scope of powers characteristic of business companies, which is limited to the parent organization.

Thus, when choosing one model or another, it is necessary to take into account that branches are inherently more suitable for those management options when strict control over the activities of its divisions is important for the parent organization, but if it is assumed that the divisions will act more or less freely as independent legal entities persons, then in this case subsidiaries are preferable.

Spelling and punctuation in this text are preserved in the form in which they were proposed by the author.

How to open a subsidiary LLC in 2020

In the case of using the first method, a completely new subject of civil circulation appears, the rights and obligations of which did not exist at all before their emergence and, naturally, could not belong to anyone. Reorganization of an existing legal entity by spinning off a subsidiary is associated with legal succession, that is, newly created legal entities become legal successors of a previously existing entity, and therefore assume its rights and obligations. Here we cannot talk about the emergence of a completely new entity, since it already existed within the framework of the reorganized legal entity. If there are other forms of legal entities among the participants in the reorganization, then this process will be regulated by its own legal acts, for example, for limited liability companies - Art. On the issue of separation, all these acts contain almost identical provisions with the exception of purely technical aspects, for example, the distribution of shares is replaced by the distribution of shares, etc. The procedure for reorganizing legal entities through separation is determined by Art. When separating another company from one company, the separated company is vested with part of the rights and obligations of the main company. One or more societies can be separated from the primary society. In this case, the reorganized company does not cease to exist and is not excluded from the state register. The decision to reorganize a legal entity operating in the form of a joint stock company in accordance with Art. It is also necessary to take into account that, in accordance with current legislation, owners of preferred shares also take part in voting on this issue and have voting rights.

Financial and industrial groups, concerns and holdings

A system of companies bound by control and economic dependence is formed by the main company together with its subsidiaries. It can be called a financial and industrial group (RF), a holding (England, USA) and a concern (Germany). The content of these formations is identical. Thus, for further convenience, one general term will be used - “holding”. Its creation is objective from the point of view of business practice.

So, the enterprise has become quite large. Cash turnover is increasing, extensive investment projects are being implemented. It becomes necessary to create divisions of the company, as well as subsidiaries. A certain hierarchy is needed. Minimization of tax and other mandatory payments is also required. This situation is quite natural for business development. Accordingly, we can say that the holding arises independently. What, in essence, are the largest Western companies today? These are entire systems consisting of main and subsidiary communities that are interconnected. We are talking about groups of individuals who have united under one brand name.

According to statistics from the Monde Diplomatic publication, in the 90s. There were about 37 thousand transnational organizations functioning. They, in turn, had approximately 170 thousand branches and subsidiaries. In Russia, there are several largest companies that have vertical integration. Thus, there are subsidiaries and dependent companies of Russian Railways, RAO Gazprom, YUKOS, LUKOIL. Currently, a number of domestic enterprises classified as medium and small businesses are characterized by a similar organization of corporate activities in one form or another. Using the structure of the holding system, many important problems can be solved, including:

organizing the implementation of a coordinated sales and production policy;
effective management of subordinate enterprises.

At the same time, there is no special legal regulation. However, in Western countries it is available. Thus, the potential of this structure is not fully realized.

Authorized fund of DP

When creating (registering) a subsidiary, the question always arises: is it necessary to form an authorized capital and, if so, in what amount? The fact is that paragraph "d" paragraph 3 of the State Registration Regulations requires the provision of "a document certifying the payment by the owner (owners) of a contribution to the authorized capital of the business entity in the amount prescribed by law."

We draw attention to the highlighted words for a reason: the current legislation does not oblige the creation of an authorized capital of DPs, unlike business entities (and even then only for joint-stock companies and limited and additional liability companies). DP is not an economic society, because it has only one owner, while in economic societies there are at least two.

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Let us recall that for the same reason it is not necessary for a private enterprise (i.e., an enterprise whose owner is one individual) to have an authorized capital. For more information about cases when an authorized capital is necessary, read the article “When it is necessary to create an authorized capital.”

Although the DP can do without an authorized fund, we recommend creating it (there are no size restrictions), and here’s why.

Firstly, you need to start with some starting capital. And even if you consider that all property can be rented, this is not always the best option. Secondly, the authorized capital will enable the subsidiary to attract funds and property of the parent enterprise without additional tax expenses.

It is enough to remember only the new taxation procedure for repayable financial assistance (loans) to understand that it is better to attract funds differently.

It is important to clarify one more thing here. The legislation does not have a deadline within which the owner (parent company) is obliged to repay the debt on contributions to the authorized fund, and therefore there is no responsibility for its failure to fill it. Therefore, it is better, even when creating a subsidiary, to fix in the charter the size of the authorized capital with a reserve for the future, because it can be filled as needed.

Consolidated reporting

Yes, in addition to financial reports on their own business operations, enterprises with subsidiaries are required to prepare and submit consolidated financial statements (Article 12 of the Accounting Law). It reflects the financial condition, results of operations and cash flow of the legal entity and its subsidiary as a single economic unit.

By the way, this illustrates the principle of the predominance of essence over form, because from a legal point of view, the parent company and the subsidiary are two separate entities.

However, unlike ordinary ones, consolidated financial statements must be provided only to the owners within the time frame determined by them, but no later than 45 days after the end of the reporting quarter and no later than April 15 of the following year (clause 11 of the Procedure for the provision of financial statements).

Attention: if your parent company is mentioned in paragraph 3 of Art. 14 of the Law on Accounting (it names JSCs, enterprises - issuers of bonds, banks, trust companies, currency and stock exchanges, investment funds and companies, credit unions, non-state pension funds, insurance companies and other financial institutions), then consolidated reporting will have to not only draw up, but also publish (together with the annual financial statements) no later than June 1 of the following reporting year. As practice shows, this is closely monitored by the State Commission for Securities and the Stock Market.

Without dwelling in detail on the procedure for consolidating statements, we point out one important rule from clause 9 of P(S)BU 20: consolidated financial statements are compiled from the Financial statements of a group of enterprises using a single accounting policy for similar transactions and other events under similar circumstances.

Discrepancies guarantee additional work because... Before consolidating (merging) reporting, it will be necessary to bring the indicators of the corresponding reports of the parent and subsidiary enterprises into a comparable form (or disclose discrepancies in the notes).

Benefits of opening

Firstly , creating a subsidiary is an ideal option for developing foreign economic activity. Therefore, creating a subsidiary in an offshore zone will allow you to save money with the help of tax benefits when concluding transactions with foreign counterparties.
Secondly , the creation of a subsidiary will increase the stability of the parent company. All risky operations can be transferred to its activities and the main company does not bear any responsibility for them.
Thirdly, the “daughter” can be assigned to carry out daily routine work or assigned certain functions for the implementation of a specific project.
Fourth, the subsidiary creates competition due to the narrow, specialized focus of the company's activities.
Fifthly, a subsidiary will provide an opportunity to increase financial flows, investments and much more.

Relationship between parent and subsidiary

A few words should be said about the peculiarities of conducting transactions between parent and subsidiary enterprises. Let us immediately dispel doubts about the ownership of the first of them to the property on the balance sheet of the second.

In fact, as we have already said, the DP as a legal entity enters into legal relations with third parties on its own behalf, and the assets it acquires are its property. The parent company will be able to claim them only upon liquidation of the subsidiary, if only something remains from the property of the subsidiary after satisfying the claims of creditors (read about this below), as well as upon distribution of profits (of course, if there is any).

And since the subsidiary has ownership rights, its transactions with the parent company for tax accounting are the usual sale of goods (work, services). Therefore, it is necessary to accrue tax liabilities for VAT and, accordingly, reflect them in accounting for income tax. Moreover, the parent and subsidiary enterprises are related entities, which means that for tax accounting it is necessary to constantly remember regular prices, and for accounting - apply the norms of P(S)BU 23.

Very often we are asked whether it is possible to include in the gross expenses of a subsidiary the amounts transferred for the maintenance of the executive apparatus (executive body) of the parent enterprise. Unfortunately, clause 5.3.6 of the Law on Profit does not allow this.

Here it is also worth paying attention to how the obligation to bear such expenses is formulated. If their amount is determined as a specific part of the net accounting profit of the subsidiary, then for tax purposes they will be considered dividends.