Subsidiary: features of creation and management. What is a subsidiary

A subsidiary company is a legally free organization that has the right to control production, supply, development of new technologies, sale of shares, and so on, but the subsidiary must give all its income to the parent company, and this company, in turn, allocates funds to pay workers , for technology, production and various costs. In fact, the state of the subsidiary depends on the financial position of the parent company headquarters.

From a legal point of view, a subsidiary is a practically free organization funded by another company, however, today we see that the parent company has a huge influence over its subsidiary. That is, he changes leaders, putting his own people, points the way for the goods to be shot down and controls production.

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Changes in control took place in 1994, until that time the subsidiary community, from the legal side, was completely controlled by the parent only finances, however, it was in 1994 that a law was adopted that states that the subsidiary, it is also a business company, is a created or an acquired business by another company.

Such a society has the right to dictate the conditions of production, however, at the same time, it has a huge dependence on the mother community. As a rule, disagreements never arise between the daughter and parent communities, because they are directly dependent on each other.

In the event of the bankruptcy of a subsidiary, the parent company should take all the blame for this incident. In the event that 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.

Opening a subsidiary, step by step instructions

Today it is not difficult to open a subsidiary community, for this you will need:

1. All documents of the ruling company.
2. Subsidiary charter.
3. Legal decision to establish a subsidiary.
4. You will need a p11001 application form.
5. It is also very important to have a document that indicates that your company does not have any debt.

There are two ways to create a child community:

Method number 1 instruction

1. To get started, draw up a special charter of the subsidiary and specify in it all the conditions you need. If the company has several holders of equity capital, then you should create an agreement in which the distribution of shares between them is scheduled.
2. It is necessary to draw up a protocol among the founders. This protocol must legally confirm the fact of the creation of a subsidiary.
3. When creating any enterprise, including a subsidiary, you need to indicate its location and contact information. Such a document has the right to create only the director of the main community, which will further control the subsidiary.
4. It is worth noting that before registering a subsidiary, you need to get a certificate that indicates that the head office has no kind of debts. A subsidiary enterprise is registered only when all debts of the parent community are paid off. If the subsidiary incurs losses due to underfunding by the heads of the head office, then through the court, the parent company will be forced to incur losses in favor of its subsidiary.
5. You need to completely fill out the p11001 form.
6. After all the above documents have been drawn up, the chief accountant has been appointed and all the necessary documents have been collected, you need to submit all the papers for consideration to the tax authority in which your company is actually registered. After all the contracts are ready, the subsidiary can begin its existence.

Method number 2 instruction

There are times when a subsidiary is not created, but assigned by mutual agreement. In common people it can be called "Absorption". Everything happens very simply: one company ruins another, and then, for a small amount, appropriates it for itself. Today there are a lot of companies that take over enterprises.

Take, for example, the Volkswagen Group, which has absorbed almost the entire automotive business in Germany and Europe over the years.

The great concern has a proven scheme, for example, let's take the takeover of the car-building company Audi: When Audi experienced financial difficulties at the end of the 20th century, the production of only one car kept it afloat, but Volkswagen creates a car of the same class, which is cheaper, more beautiful. more reliable and better in technical characteristics.

Naturally, motorists will buy a Volkswagen product, not an Audi.

Such a scheme is something unprofitable for the takeover company, however, this contribution completely illuminates Audi, as a result of which it asks for financial assistance from Volkswagen, after which it becomes a subsidiary, on which its directors are put.

There are many such examples, for example, take the same automotive industry: today there are three concerns: Volkswagen, Toyota, General Motors. They control 85 percent of the entire automotive world. Few would think, however, almost all well-known brands belong to these concerns.

Well, if you take over the company, or you just agreed on everything by mutual agreement, you must do the following:

1. To begin with, you should choose the direction of the subsidiary, that is, give detailed instructions for production. Note that the production of the subsidiary may differ from that of the parent community.
2. The subsidiary is an independent entity, however, the rules are still dictated by the parent community, so a detailed charter should be developed regarding the subsidiary community.
3. According to the law, the acquired company must have its seal, its bank account, its address and its registered individual, so take care of all this.
4. Decide on the choice of director and accountant in the controlled community. Agree with them all agreements regarding profit.
5. You need to contact the state. chamber and submit an application with the following documents: A certificate from the bank about your account, the service characteristics of the officials of the subsidiary community, the charter you signed, a letter of guarantee in which you indicate the address of the subsidiary community, you must provide in writing information about the founder, a certified copy of the acceptance certificate - fund transfers, certified copies of payment transactions.
6. The last step is simply to obtain a certificate of registered subsidiary, after the company is registered, it can start its duties.

Pros and cons of a subsidiary:

pros

1. The subsidiary does not have to worry about bankruptcy, as the parent company is obliged to pay off any debts of its company.
2. You should not calculate the budget and expenses of the company, because all this responsibility is assumed by the parent community.
3. There is no need to be afraid of competitors, because the parent company personally worries about them.

Minuses

1. Of course, the main disadvantage is the lack of freedom. The subsidiary must produce what is imposed on it! No control over supplies, production and finances. It is very difficult to develop technically with such conditions.
2. All capital is completely under the authority of the parent community, so it is difficult for you to invest money for the development of a subsidiary. A certain capital is allocated by the parent community, which is fully distributed.
3. If there are still enterprises under the authority of your parent community, then in the event of their bankruptcy, it must reimburse all losses, so the money will be allocated from the earnings of another subsidiary, which will actually provide several enterprises with its production. But if the bankruptcy is too difficult, and it is the office of the parent community that goes bankrupt, then, most likely, the subsidiary will be closed, since there will be no money to finance it. The main salvation will be either sponsors or some other parent company.

Tax accounting

The subsidiary company is obliged to pay taxes to the state, however, in the same way as the parent organization sponsors this community. There are cases when the subsidiary community is in debt to the office of the parent company.

In such cases, there are several developments of events, including:

• closure of a subsidiary (in the event that the debt is too large);
• reduction of the subsidiary's capital, while the rate of production should not fall;
• debt forgiveness;

The most common option is the third, because the subsidiary does not have its own capital, so all the debt was formed due to underfunding from the parent community.

Forgiving a subsidiary's debt is a legal process that is completely legal and transparent.

How is a subsidiary company different from a branch?

A subsidiary is a legal entity, all its actions, such as contracts and various important decisions, must be agreed with the parent company in the form of a transaction. A subsidiary can only be located in the region in which his “Mom” is located.

The branch is not a legal entity, it deals only with the affairs of the main company. Due to the fact that the branch is not a legal entity, all transactions are executed on behalf of the main enterprise. It should also be understood that a branch can be located not only in a different region from the main company, but also located on the territory of other states.

A commercial firm can operate in another region or even a state by opening a subsidiary or branch. What are these structures?

What is a subsidiary?

Under subsidiary means a legal entity whose authorized capital belongs to the parent organization that established it. Moreover, both companies can carry out activities in different areas. Moreover, the parent is not always directly involved in the management of the subsidiary. But, as a rule, this happens, and the segment of the activities of the companies coincides.

Subsidiaries are established through state registration. In addition, the parent company develops a charter containing the required provisions for the subsidiary, and, if necessary, also a memorandum of association.

The subsidiary, since it is an independent legal entity, has property in its own management, which is responsible for its obligations. In addition, this organization can be a plaintiff and defendant in court hearings independent of the parent company.

The subsidiary is not required to be liable for the debt obligations of the parent company. In turn, the reverse liability is provided for by the legislation of the Russian Federation. That is, if a subsidiary has financial difficulties, then the parent company may have subsidiary liability for the debts of the enterprise belonging to it.

What is a branch?

Branch - this is a structure dependent on the main organization, which is not an independent legal entity, but located, as a rule, at a significant geographic distance from the head office. For example, in another subject of the Russian Federation.

The branch is fully subordinate to the head office in terms of management. All contracts are signed by the head of this structure, who carries out his activities under a power of attorney from the top managers of the main organization.

Information about the established branches must be recorded in the constituent documents of the company. These structures are formed on the basis of special provisions approved by the management. State registration of branches as legal entities is not carried out - you only need to notify the Federal Tax Service about their opening. If this is not done, the tax authorities can issue fines. But if we talk about branches of foreign companies in Russia, they must be accredited by the State Registration Chamber.

Branches have fixed property, but they are not able to have property or non-property rights, do not act as a party to legal relations and are not plaintiffs or defendants in court hearings.

The property that is assigned to a branch is often used as collateral for the debts of the main organization. In turn, the head office bears property liability for the obligations of its division.

Comparison

The main difference between a subsidiary and a branch is that the first structure is legally independent from the main organization, the second is fully connected with it. This predetermines all other differences between the two types of firms in question.

It should be noted that the main organization can establish a branch in one region and a subsidiary in another, and both structures will do the same thing. Therefore, in practice, the activities of branches and subsidiaries usually do not differ much. Their status is sometimes dissimilar only on legal grounds.

Having determined what is the difference between a subsidiary and a branch, we will record the conclusions in the table.

Table

Subsidiary	Branch
What do they have in common?
The activities of a branch of an organization in one city and its subsidiary in another may be the same
What is the difference between them?
Is a legally independent organization	Is completely dependent on the head office structure
Can be a subject of legal relations, a plaintiff and a defendant in court	Cannot be a subject of legal relations and a participant in court hearings
Has a separate property	Has a fixed property
Not liable for the obligations of the parent organization	The assets assigned to the branch can be recovered against the debts of the head office

A subsidiary company is a separate legal entity with a full set of rights and obligations. Let's take a closer look at what a subsidiary is, how it works and how it differs from a branch.

What is a subsidiary

A subsidiary company is a full-fledged legal entity with a full set of rights and obligations inherent in the chosen organizational form. In its economic activities, it is guided by the constituent documents, and settlement accounts in banks.

Download and take to work:

How will help: the instruction contains a clear procedure for checking management accounts, a detailed analysis of each indicator characterizing the company's financial condition.

How will help: to establish interaction between the financial services of the management company and subsidiaries. It sets out the time frame in which departments provide data for reports and budgets.

How will help: the regulation describes the basic principles and methods of forming and approving the budgets of the subsidiaries of the group. Special attention is paid to the procedure for making changes to approved plans. The use of this document in practice will help harmonize the interests of all participants in the budget process.

How does a "daughter" differ from a branch?

A branch, in contrast to a subsidiary, is completely devoid of autonomy, since it is considered only a separate division of the company. Its activities are regulated by the branch regulation, which is approved by the head office.

Table... Comparison: branch and subsidiary

Branch

Subsidiary

To create a branch, you do not need to form an authorized capital. The degree of autonomy is established by the head unit. Simplified financial settlements between the parent company and the branch. The legislation does not allow companies to establish branches under a simplified taxation system. The head division is responsible for the activities of the branch. Unlike a subsidiary, a branch is functionally limited. If you plan to split the business, it makes no sense to create a branch

A subsidiary is an independent legal entity that bears all the risks associated with its own activities. The legislation does not limit the procedure for creating a subsidiary. A subsidiary company can carry out statutory activities without restrictions. To create a subsidiary, you will need more registration documents and will have to pay up the authorized capital . The corporate center may have difficulties in managing the subsidiary. If the business is licensed, the subsidiary will have to reissue a license

"Subsidiary" or branch: which is more convenient and cheaper for the company

The tax consequences and asset protection depend on your decision whether to open a subsidiary or a branch, or even a separate division is enough. We have identified the criteria by which it is easier to determine what to choose.

How to open a subsidiary

To register a subsidiary of the main company, you will need:

1. Draw up statutory documents, minutes of the meeting of founders on the appointment of a director. To certify them with a notary for registration (five working days);
2. Conclude an agreement of intent or receive a letter from the landlord to confirm the address of the location of the unit (five business days)
3. Register a legal entity with funds and statistics authorities at the location of the subsidiary (five working days);
4. Make a seal of the newly created company (one business day);
5. Open a current bank account as usual (three working days).

How to finance a subsidiary

The company can finance its subsidiary both with its own funds and with bank loans.

On their own, this is possible in the following ways:

• make a contribution to the authorized capital in cash or property;
• transfer the necessary funds as an advance payment for future work (services);
• provide goods for sale with a significant delay in payment;
• give a loan.

When attracting loans, you need to take into account that a subsidiary at the beginning of its activities is often unprofitable. The bank can either refuse funds or offer them as collateral for another, more profitable company of the company. It is possible to increase the authorized capital of a subsidiary to positive, but this is a costly and lengthy procedure that also requires careful legal registration. In addition, the owners of many companies deliberately keep a low share capital, thereby reducing the risk of losses.

All settlement transactions between the subsidiaries of the group are formalized only by business contracts, since in such cases they can be the basis for the transfer of funds or the transfer of assets.

Question: how to keep track of subsidiaries' money?

Elena Ageeva, Financial Director of Golder Electronics LLC

It's time to solve the problems of the "daughter" if she:

• submits to the parent company overdue budgets, financial plans and management reports;
• regularly deviates from the approved cash flow budget;
• increases the loan portfolio without objective reasons;
• tightens;
• disrupts the terms of payment to counterparties;
• makes mistakes in data on debts, expenses, receipts.

Read more about what to do in such a situation in the material of .

How to manage and control a subsidiary

The management of the subsidiary company is assumed by the general director, who may also be one of its co-owners. In addition, a subsidiary can create its own executive body, such as a board or board of directors. Since all operational activities are managed by their own management, and strategic decisions are made by the owners, this gives more autonomy to the subsidiary. Current control in it is based on regular monitoring of the implementation of the approved target performance indicators and analysis of the identified deviations. This is the best option, allowing, on the one hand, not to inflate the staff of management personnel, and on the other hand, to promptly respond to the changing situation in the "daughter".

Question: is it easier to manage - a branch or a subsidiary?

Natalia Alekseeva, Financial Director of TRIER Group of Companies, Ph.D. n.

For the assessment, we will use the following parameters:

Prompt decision-making;

The risk of exceeding authority by the management of the unit;

Efficiency of movement of fixed assets and goods;

The degree of mobility of employees;

Number of functions performed on site;

The degree of workload of the head company staff.

Each indicator will be evaluated by points (from 1 to 5). The higher the score, the easier it is to manage the unit. Then we compare the cumulative score for the two scenarios (see Table 1).

Table 1. Assessment of the degree of manageability of a branch and a subsidiary

Index			Subsidiary		Note
	Explanation	Score, point	Explanation	Score, point
Prompt decision making	Decisions are made at the branch within the established powers or according to the regulations of the head unit		All key decisions are made by the general meeting of participants		Decisions on a branch are made more quickly than on a subsidiary
The risk of exceeding authority by the management of the unit	At the head of the head (chief, director) of the branch, acting on the basis of a power of attorney		Led by a director acting on the basis of the charter		For the branch, there is a lower risk of abuse of authority by officials
Efficiency of property movement	The movement of property is drawn up with internal invoices, since in fact the movement of objects occurs between divisions of one legal entity without transfer of ownership		Only through contributions to the authorized capital or purchase and sale agreements. It is possible to transfer assets free of charge, but there is a risk of a tax audit		All transactions with subsidiaries are possible only under contracts. Significant tax disadvantage for a subsidiary - transactions are subject to tax administration (controlled transactions)
Goods movement speed	Movement of goods within a group of companies without transfer of ownership. Taxes do not arise, as there is no sale of goods		Only under a sales contract or a commission with the emergence and payment of VAT and income tax		The branch has a clear price advantage as the additional markup in the supply chain is less than that of the subsidiary
Efficiency of movement of employees	According to the supplementary agreement to the employment contract on changing the place of work		Only through transfer or dismissal		Transactions for the branch follow a simplified procedure, do not require the conclusion of contracts, and are less painful for the staff
Number of functions performed on site	Part of the auxiliary functions can be performed by the head unit		The execution of all auxiliary functions in the following areas should be ensured: HR, lawyers, accounting, IT, etc., including through outsourcing ... The head office can perform part of the functions of a subsidiary, but only under an agreement
The degree of workload of the head company staff
Overall assessment of criteria

If we evaluate seven criteria for the degree of manageability of divisions (see Table 1), we can conclude that it is easier to manage a branch (30 points) than a subsidiary (22 points).

For more information on what is more profitable for a subsidiary or branch, see the decision of .

Accounting and management accounting in a subsidiary

The subsidiary maintains accounting and tax accounting, as well as bears responsibility to the tax authorities for the formation of reliable reporting.

Video consultation: how to objectively evaluate the results of subsidiaries

How to liquidate a subsidiary

The liquidation of a subsidiary is a complex and lengthy process that involves carrying out all the procedures provided for in this case: making a decision by the owners or obtaining a court decision, creating a liquidation commission, notifying counterparties, settling debts, dismissing staff, etc. ... The liquidation of the "daughter" is considered complete, and the legal entity - ceased to exist only after it has been entered

Large corporations open new organizations to expand their business. They are called "children". The company's enterprise creates such at its own expense. It is responsible for their work before the state and regulatory authorities. Accordingly, the subsidiaries are managed from the parent organization. However, such companies are not responsible for the work of the main corporation. Let us further consider what a subsidiary LLC is.

General information

A subsidiary company is a legal entity. It must be registered in the manner prescribed by legislative acts. The formation of a new company is carried out by transferring part of the property to economic management. Acting as a founder, the main corporation approves the head of the organization, implements the rights of the owner, which is established by the relevant regulations.

Specificity

A subsidiary is an organization whose structure is identical to that established at the head office. The difference between them is that the main corporation has more rights and advantages. However, she also has more responsibility. One of the advantages of a head office is the ability to make administrative decisions regarding all activities of an open firm. It is generally accepted that for full participation in its activities it is necessary to have 3% of its shares. However, in practice, this figure rises to 5%. Undoubtedly, a controlling stake (over 50%) provides many advantages to the main corporation. At its core, a subsidiary is a separate division. The activities are controlled not only by the main corporation, but also by the state. All financial transactions are under the scrutiny of supervisory authorities.

Manual

The main organization sends its employees to newly opened firms. At the same time, the head of the representative office receives a seat on the board of directors. For example, Gazprom's subsidiaries work according to this principle. Employees of the main office can give orders, recommendations for promoting the business and for all activities of the organization as a whole. However, the final decision belongs to the head of the subsidiary.

Compensation for damages

In some cases, the established company begins to lose profit due to the illiterate policy of the main corporation. In such situations, creditors have the right to demand from the parent company to pay off the arisen debt. The counterparties act in a similar way in the event of the bankruptcy of an open organization.

Opportunities

A subsidiary company is primarily a business expansion tool. Through the network of such organizations, the main corporation can significantly strengthen its position in the market. A large holding undoubtedly carries more weight than a single firm. Gazprom's subsidiaries can serve as an example. One of the key tasks of such organizations is to identify potential competitors in the market. Often, single firms quickly leave the sector when a representative office of a large holding appears in it. In addition, a subsidiary may be formed to capture new market segments. To increase the capital inflow, the corporation must look for new, more promising sites. This leads to the active entry of large corporations into international markets through the opening of representative offices abroad.

Benefits

Large corporations can face various problems in the course of their work. To solve some of them, the enterprise can create a subsidiary company. Often a corporation needs to improve its administration system, free itself from routine activities. The formation of a new organization may well contribute to the implementation of this task. At the expense of the subsidiary company, such important problems as recruitment and the fight against competitors are also solved. The more such organizations a holding has, the more advantages it has in the market.

Subsidiary and parent company

It is considered quite normal that an organization formed by the main corporation becomes an independent firm with separate property and equity capital. Accordingly, it is not liable for the debts of the parent company, just as the main holding cannot be held liable for the obligations of the subsidiary. Meanwhile, the legislation still provides for a number of cases in which claims can be addressed to the main corporation. The parent company is liable when:

• the conclusion of the transaction took place on her order (this fact must be documented);
• the subsidiary complies with the orders of the parent organization and is declared insolvent (bankrupt).

In the first case, the settlement of obligations is carried out in full. In the second situation, the parent company pays off only that part of the debt that the subsidiary company is unable to pay.

Difference from branch

First of all, the subsidiary has legal autonomy. The branch is fully linked to the main office. This fact predetermines other differences as well. Moreover, it often happens that the main corporation opens a subsidiary in one region, and a branch in another. Both organizations will have a common goal. In this regard, in practice, the work of branches and subsidiaries is not very different. The discrepancy between these organizations can exist only on legal grounds.

Features of creation

Before opening a subsidiary company, it is necessary to develop a Regulation on its activities. Based on this document, the new organization will work. In addition, changes must be made to the charter of the main corporation. It is necessary to send applications to the registering authority according to the established forms. The formation of a subsidiary should be discussed at a general meeting. This issue should be included in the protocol. The decision of the meeting to create a new organization must be attached to the package of documents.

During the discussion, the head of the future company is also determined. The prepared package of documents is certified by a notary and sent to the registering authority. A subsidiary company will be considered established from the moment the corresponding entry is made in the Unified Register. After that, organizational issues are resolved. The subsidiary company must have the entire package of documents established for legal entities. The organization also needs to register with the tax office.

A company is a subsidiary in the full sense if the parent company owns a controlling stake. In the interim regulation on holding companies, this concept is disclosed as follows: a controlling stake is understood as any form of participation in the capital of a company that provides the unconditional right to make or reject certain decisions at a general meeting of its participants (shareholders, shareholders) in its management bodies.

World experience shows that the level of a controlling stake can be significantly less than 50%. So, if a company is large and its capital is "scattered" among a large number of shareholders, then less than 100% of shareholders actually participate in the voting. In foreign business practice, situations are known when, on a specific date, the controlling stake was several percent of the share capital.

It can be argued that control provides such a participation in share capital that allows you to have a casting vote in personal appointments to key positions of the chairman of the board of directors and the CEO of the company. To determine the personal composition of the governing bodies, it is sufficient to have a simple majority of votes at the general meeting with a quorum of 50%. In this case, control can be provided by a block of shares of less than 51%, provided that the blocks of shares of other shareholders are much smaller.

Currently, large Russian companies have one or more subsidiaries or affiliates. It is not uncommon for an individual entrepreneur to own several companies. Formation and reorganization of a group of privately owned companies requires the creation of appropriate organizational and legal forms and corporate schemes.

The process of creating subsidiaries is associated with certain costs. Therefore, the decision to form a new dependent or subsidiary company needs a comprehensive justification. It can be obtained in the course of developing an appropriate business plan or general concept of the subsidiary.

The benefits of creating child structures are not always quantified. A subsidiary company is a tool for achieving both tactical and strategic goals of the company. Long-term plans of the company's management, assessment of business development prospects can be of decisive importance. The principles of forming subsidiaries and affiliates are similar for both small and large firms. Let's consider the main situations in which it is advisable to create child structures.

Traditionally, subsidiaries and branches are created with the aim of developing the company's sales activities, penetrating regional markets. A separate sales division "sales point" is the first step in the development of a small company or firm. Along with subsidiaries, sales agents, dealers, distributors, etc. may operate in the regions. In these conditions, the task arises of mastering the legal and organizational tools for the formation of commodity distribution networks, the creation of sales schemes.

With the expansion of the scale of the company's activities, one of the main management problems is the organization of the company's sales system. In order to coordinate the work of sales structures in the central office, special services and divisions are created. In many foreign corporations, sales activities are carried out by specialized divisions and subsidiaries. The specific ways of organizing subsidiaries for marketing products depend on the overall business development strategy.

As the volume of commercial transactions grows, there is often an increase in the range of products and services. In these conditions, it is advisable to redistribute the resources of the corporation and allocate the most promising areas in specialized subsidiaries. Often, a subsidiary company is opened for a specific product or service. New firms are created or acquired for the purpose of completing the product range more fully and creating backup activities. Diversification is a strategy aimed at increasing the economic power of a company, increasing its stability, since one of the company's advantages is the ability to maneuver resources, quickly transfer funds to the most promising markets and types of business. It is indicative that in the conditions of the 1998 crisis, it was precisely diversified structures - diversified, diversified companies - that gained a certain advantage.

When forming value chains, in many cases, entrepreneurs tend to have their own supplier of products, components, their own sales and auxiliary structures (warehouses, transport companies, repair facilities, etc.).

Creating your own structures may be preferable to using third party services. Therefore, in business practice, there are often combinations of "industrial enterprise - dealers", "publishing house - printing house", "wholesaler - retail enterprises", "assembly production - production of components", etc. There are also multi-link chains: “raw materials - semi-finished products - finished products - sales”. Many Russian companies are striving for control over key links of value chains. Interconnected production chains are a feature and attribute of vertically integrated companies.

The creation of subsidiary structures can be aimed at improving the corporate governance mechanism. As a result, some functions are removed from the staff of the parent company. The firm's management is freed from managing the day-to-day business management operations. It is advisable to start mastering a promising direction or market on the basis of a new dynamic structure, by separating it from the company. At the same time, additional motivational incentives are formed, since the subsidiary's budget is usually linked to the results of its activities. The management of the parent company, in turn, can focus on the main thing - the development strategy of the company, personnel work and planning the distribution of the company's resources. This does not mean that the parent company is relinquishing control over the subsidiaries. The existing legislation contains all the necessary legal and administrative tools for managing subsidiaries. In a general sense, holding mechanisms create prerequisites for the organization of modern corporate management systems.

The formation of a subsidiary firm on the basis of autonomous divisions of the company allows to reveal the mechanism of market specialization and their focus on specific markets. A subsidiary usually has the status of a business unit of the company. It can act as an autonomous economic unit with an integral management system. The allocation of autonomous economic business units and other centers of responsibility is the basis of all modern mechanisms for the formation of corporate management systems.

In the organizational structures of Russian companies, sub-holdings and other enlarged divisions are increasingly common.

Some large Russian corporations set up subsidiaries to serve their internal needs. Usually these are transport, construction, insurance, audit and consulting services. The largest corporations have their own financial structures. This approach has become widespread in world practice, since it is aimed at "catching" the effective demand created by the company itself (and the corresponding part of the profit). On the other hand, it is easier to get from your own firm exactly those services or products that the parent company needs. The guaranteed demand becomes the basis for the created structures for action in open markets. It should be borne in mind that the choice between “own” and “foreign” companies needs special justification and is not always obvious.

It is possible to create a large group of corporate schemes aimed at reducing financial and tax losses. We are talking about transactions in the category of transfer (i.e. intra-company). Schemes of this type include, in particular, the use of firms in Russian and foreign "tax havens". Corporate schemes with the participation of subsidiaries allow:

Redistribute costs and revenues between the companies of the group;

Create "subsidiary" profit centers;

Transfer income through companies registered in preferential regions;

Optimize intra-firm financing and ensure the attraction of external sources of financial resources;

Coordinate investments and consolidate the company's financial potential, coordinate the group's stock operations.

Subsidiaries allow the parent company to maneuver material and financial resources. On their basis, it is possible to apply such convenient forms of business as joint activities, product sharing, and leasing. Transfer (intracompany) transactions remain relevant, despite a number of restrictions that have appeared in the domestic tax legislation.

Currently, the production of goods (building materials, sanitary ware, some consumer goods) on the basis of licenses of foreign companies has become widespread. However, foreign firms are not always willing to expand the circle of their licensees. The owner of a dealership or distributor may also have difficulty obtaining a dealership agreement for other businesses that they own. In this case, it is advisable to create in the required region special corporate structures and, above all, separate branches. Such a branch may be located in a favorable region. Profits from its operations will be taxed at its location. Registration of a new license (dealership agreement or franchise) is not required, since the branch is not a legal entity.

The licensed activity is usually highly specialized, so it can be spun off into a separate company. Some types of licensing business (for example, insurance) can only exist as separate companies. For the management of mutual investment funds, it is advisable to establish subsidiaries. Subsidiaries are also created for activities that require registration or special accreditation. Licensed types of business include banking, insurance, investment activities, auditing, etc. There are several dozen licensed types of business.

The methods of using subsidiaries abroad are generally similar to those described above. The difference lies in the fact that foreign firms operate in different conditions: with different tax, customs and corporate legislation. In their activities, foreign subsidiaries must take into account international agreements in the field of taxes and investments. The creation of sales structures abroad is one of the most promising areas of activity. Subsidiaries abroad are a necessary element in organizing exports, purchases and attracting funds from foreign investors. If a company has acquired fame and reputation abroad, the likelihood of attracting investments in its Russian part increases significantly. Setting up subsidiaries abroad, i.e. the formation of an international holding is a complex problem with many aspects that requires independent consideration.

Increasing the stability of the business and managing property risks consists in the transfer of risky operations to subsidiaries. They have limited liability that does not affect the property of the parent company. The stability of the holding system as a whole is increasing: financial difficulties or bankruptcy of one of the companies will not lead to the collapse of the entire holding. The risk mitigation strategy provides for the placement of the company's main liquid reserves in financial structures specially created for this purpose. In parallel, the stability of the parent company's control over its subsidiaries is increasing. Their current funding and investments will depend on decisions taken at the company's headquarters. Risk management in a holding company requires taking into account additional forms of property and tax liability provided for by law for interconnected and affiliated persons and the main forms of business associations.

Ownership of open joint stock companies is limited by antitrust laws. This limitation can be removed by establishing intermediary companies. If there are several firms, it is difficult to establish true relationships between them. The holding system can reliably hide the company's vulnerabilities (decision-making centers, cash centers, key persons and specialists). The resources of a company can be dispersed or, conversely, concentrated in its most reliable link.

With the help of subsidiaries, transactions with capital-intensive properties may not be carried out directly, but through the sale of the companies that own these properties. Intermediate companies line up in ownership chains. On their basis, headquarters services and offices of holding companies sometimes function. Companies are created for one-off purposes. After that, they are either eliminated or transferred to a passive state. Companies registered for future use are called “shelf companies” in the world.

The presence of subsidiaries is an important factor in the competition, since it largely determines the organizational capabilities of the company and its financial potential. A company with subsidiaries looks more massive than a single enterprise of equal size. In addition, the corporate name of such a company may include the words "holding", "group", "concern", etc.

Thus, one of the most obvious and natural motives for creating subsidiaries is the formation of sales structures, regional sales and service divisions. The desire to control suppliers can be equally important. The organization of the holding makes it possible to pursue a unified production, technological, investment and sales policy across the entire business association, coordinate financial and material flows, distribute responsibility and improve the decision-making mechanism.

According to one approach, the divisions of the company should have the right to "own business", i.e. make decisions autonomously, bear responsibility and be encouraged depending on the results of activities. Firms of industrialized countries have gone through a stage of rigid centralization and command management style. The classic example was the company of Henry Ford, known for its authoritarian management style. Russian entrepreneurs often avoid “letting go” of any part of their company. At the same time, the solution to the problem of organizing reliable control or direct management of them is often underestimated. Domestic legislation contains all the legal norms necessary for this (while the subsidiaries formally remain independent legal entities).

First, it is proposed to improve the mechanism of responsibility of the parent company to the subsidiary, its creditors and shareholders. Now the inadequacy of legislation in this area has become apparent, for example, in the relationship between the management and the controlled company.

Second, an unresolved problem is a loophole that allows the management of the parent company to buy up shares of its company at the expense of subsidiaries, without using its own funds. A mechanism to minimize the risk of managers' disloyalty to investors may be a ban on subsidiaries from acquiring voting shares (stakes) of the parent company.

It is also advisable to introduce amendments to tax legislation aimed at eliminating double taxation of dividends within groups of companies, as well as the regulation of tax and civil law relations related to transfer pricing. Indeed, until now, Russian tax law does not recognize the general interest of the group of companies and is trying to tax any deviations from the market price that arise in transactions concluded between essentially dependent units.

A combined approach seems to be productive, when the competence of the management bodies of subsidiaries is strictly defined by the strategy of the management of the owner company. Organizational and legal methods allow limiting the powers of subsidiaries. Thus, the level of centralization (decentralization) of management should be flexibly regulated depending on the specific situation and company policy.

Before creating a new legal entity, you need to make sure that this is really necessary, since registering a company will require an investment of time and money. In many cases, it is advisable to limit yourself to the creation of a branch or other separate division. A separate division can obtain the necessary degree of financial and operational independence within the framework of an existing company. This is achieved through administrative, legal and financial mechanisms. A separate division can become a profit center, have its own balance sheet and budget, its head often gets the right to sign on behalf of the company. The existing legal, administrative, organizational and financial mechanisms make it possible to form any required corporate structure. However, this requires the study of many aspects, knowledge of the technique of drawing up the constituent and other setting documents of the company.

Branches and representative offices are separate structural units of the company. The difference between them is that a branch can carry out all statutory activities, and a representative office - only agency and representative. The location of branches and representative offices does not coincide with the place of company registration. They are endowed with property, which is accounted for both in the separate balance sheets of branches and representative offices, and in the company's balance sheet.

The head of the branch can act on the basis of a power of attorney issued in accordance with the current legislation and the charter of the company. Representative offices and branches operate within the framework of the regulations approved by the company. The legislation requires notifying the state registration authorities about changes in the charter of the company associated with changes in information about its branches and representative offices.

A branch is a perfectly acceptable mechanism for creating separate divisions of a company. The branch manager may be vested with significant economic authority and the right to sign on behalf of the company. The branch is able to be the center of profit (more precisely, the center of financial responsibility) of the parent company.

Certain difficulties are associated with the coordination of the balance sheet and accounting statements with the central office, since the branch balance sheet is an integral part of the parent company's balance sheet. But this problem is purely technical; it is solved with the help of modern accounting and computer technologies within the framework of the accounting policy of the company. The most significant difference between a branch and a subsidiary is that the company bears full property responsibility for the branch, since it is its internal structural division. The company is not directly responsible for the subsidiary. Financial settlements between branches are conditional accounting in nature, although this does not mean that they are absent. Intercompany turnover is an object of management accounting, and relations between branches are of a self-supporting nature. Settlements with subsidiaries are also of an intra-firm nature, but technically they are made in the same way as with any other companies.

The Russian regulatory system obliges to register separate divisions of the company with the tax inspectorate. The branch bears tax liability at the place of its activity in proportion to the volume of business operations in the manner prescribed by law. At the same time, settlements and relationships with local tax authorities are determined by the company's accounting policy. It should be noted that there is no final clarity in tax legislation regarding the scope of tax liability of separate divisions and branches. The problem is solved on a case-by-case basis during the development and "testing" of the company's accounting policy. In this case, the tax authorities should be guided by the official documents of the company: the regulation on the branch, accounting policy and other internal regulations.

The organization of subsidiaries as branches of the parent company does not necessarily lead to rigid centralization of management. A branch can be a completely independent subdivision of a company operating on the principles of internal cost accounting. The measure of its autonomy is determined by the management of the company based on its strategy. A branch can have the status of an independent accounting and financial center of the parent company. The advantage of the “branch” variant of the organization of the company is that the branches are in the sphere of direct action of the administrative mechanisms of the parent company. For subsidiaries, such a mechanism still needs to be established. This circumstance explains the recent transformation of some subsidiaries into branches by a number of large commercial structures. The same accessibility for administrative teams can be achieved in the case of a child structure in the form of a dependent legal entity.

Despite a number of important advantages of a branch, when choosing the organizational and legal form of a subsidiary, in many cases, preference should be given to the creation of a subsidiary with the status of a legal entity. This is due to the fact that the subsidiary is a full-fledged subject of economic relations. A subsidiary company may have greater responsibility and independence. In terms of its functionality, it is significantly higher than the branch. Thus, a subsidiary company (even in the form of a limited liability company) is capable of issuing securities, which is inaccessible to a separate division in the form of a branch. In some cases, it provides a valuable opportunity to conclude contracts, as it were, "with oneself." After all, a central company can conclude contracts with a subsidiary company, even if its actions are 100% determined in the same central office.

The presence of a separate (but dependent) subject of taxation creates the possibility of intra-firm redistribution of costs and income, which optimizes commodity and financial flows and reduces tax losses. Subsidiaries become part of tax, financial and investment schemes. At the same time, it should be noted that subsidiaries, branches and separate divisions can equally play the role of structural units of vertically integrated companies, concerns, groups and holdings.

Consider the procedure for creating a subsidiary company - a joint stock company. Its founder is the parent company: it decides to establish a society. It is possible that partners of the parent company or other subsidiaries participate in the establishment of the company. In this case, it is necessary to hold a constituent assembly.

The agreement on the creation of the company and the charter are related in content. The agreement may reflect the mechanism of management and functioning of the company agreed by the parties, which predetermines the content of the relevant articles of the charter. The founders are responsible for the proper paperwork and the implementation of the registration procedure.

A subsidiary company can also be created by acquiring control over an existing enterprise. Entrepreneurs can purchase ready-made companies - closed joint stock companies and limited liability companies. The joint stock company is acquired through a share purchase agreement. The sale of a limited liability company is accompanied by a change in the founder of the company. These changes are filed with Companies House, Bank and Tax Office.

The size of the share in the capital of a subsidiary, allowing to ensure effective control over its activities, depends on many circumstances, in particular, on the capital structure and provisions of the company's charter. The parent company can control the subsidiary company and integrate it into the management system with less than 100% participation in the capital. For complete control, as a rule, it is enough to own the package and 75%. It allows you to determine the solution of issues that require not only a simple, but also a qualified majority with any quorum.

According to the Russian law on joint stock companies, a qualified majority (3/4 of the votes of shareholders participating in the general meeting) is required to approve the Charter and amend it. The same qualified majority is required to make decisions on major transactions exceeding 50% of the book value of the company's assets.

For transactions whose value ranges from 25% to 50% of the company's capital, a unanimous decision of the board of directors is sufficient. The list of issues requiring a qualified majority of votes is contained in the company's charter. For all other issues not listed in the charter, a simple majority vote of the shareholders present is sufficient. To form the management bodies of a subsidiary, 51% of votes from those present at the general meeting are sufficient. Such a package guarantees a fairly reliable control. Control over a subsidiary company is ensured not only by the ownership of a block of shares, but also by the relevant provisions of the charter, by the introduction of representatives of the parent company into the management bodies of the company.

In relation to subordinate legal entities of a non-stock type, control can be ensured through the powers arising from the statutory and constituent documents. The criterion here is the same - the ability to influence the adoption of certain decisions (first of all, personnel and some procedural) and guaranteed to block unwanted decisions about changing the charter and the status of society.

The parent company can effectively influence subsidiaries by holding not controlling, but “sub-control” or “blocking” stakes, i.e. packages sufficient to block unwanted decisions of the general meeting of shareholders.

A blocking stake is especially effective in cases where the charter specifically stipulates the rights of shareholders who are in the minority in the voting. For example, the charter may provide for the possibility of vetoing certain decisions with 30-33% of the vote. In some cases, a blocking package is acceptable for a strategic investor when organizing a joint company or investment project.

A blocking stake is close to parity in value if the charter provides for a wide range of issues that can be blocked by a qualified minority. Having received an appropriate share in such a company, the investor has the opportunity to prevent any changes in the charter aimed at limiting the rights of the holder of the blocking share. As a result, a package, for example, 25-38%, may be equivalent in weight to 50% of the package. This is due to the fact that the owner of the controlling stake will have to coordinate his decisions with partners. As a result, it turns out that 1% of shares in a society with minority rights may cost more (or, conversely, cheaper) than a similar percentage in a society without such participation. Minority rights terms can be formulated in various ways. They can be "switched on" only when certain issues are resolved or when certain circumstances occur. Minority rights are also a tool for balancing investor interests and can be negotiated by investors when establishing a company.

For joint stock companies, there is another gradation of influence. According to the law, a package of 10% gives the right to convene extraordinary (extraordinary) meetings of shareholders. This is a significant tool for putting pressure on shareholders. For example, a meeting can be called at the most favorable moment for a given shareholder. For large joint-stock companies with scattered capital, when the controlling stake is insignificant in the event of an incomplete attendance of shareholders, the right to convene meetings helps to strengthen the dominant position of the main shareholder.

At a general meeting, a majority (or qualified minority) is achieved through voting blocs and procedures. It consists in obtaining powers of attorney from minority shareholders to vote in favor of a person claiming control over the firm.

The balance of power in the management of a joint-stock company may be significantly influenced by the provision on cumulative voting in the election of the company's board of directors. Under certain circumstances, it can be an additional guarantee of the rights of minority shareholders and an extremely inconvenient “restriction” of the powers of the main shareholder. At the same time, cumulative voting is an instrument of “fair” balancing of interests of co-investors in a joint or collective business.

To strengthen control, the presence of a significant block of shares can be supported by a special agreement, according to which the administration of the parent company has the right to give direct orders to affiliated firms.

The new legislation on joint stock companies provides additional opportunities for operational control over the subsidiary. Thus, control is carried out on the basis of a special agreement between the parent and subsidiary companies. This means that the presence of a controlling stake is supplemented by a special agreement. In this way, a legal basis is created for direct operational control by the parent company over the subsidiary.

When determining the degree of dependence, there are the following gradations of control:

Full control, no co-investors;

From 75% - full control in the presence of co-owners. Provides changes to the charter, liquidation and reorganization of the company;

From 51% - guaranteed control over personnel appointments, the ability to conduct "especially large transactions". In the generally accepted

understanding - the level of the controlling stake;

From 33%. Blocking package, if the charter provides for a "minority right". The blocking package can also be 20-25%;

From 20%. A subsidiary is qualified as a dependent and affiliated company. For a joint stock company, it is necessary to publish data about it in accordance with the requirements of the Federal Securities Commission and some other regulations;

From 10%. The possibility of calling an emergency meeting (for JSC).

In a joint-stock company with more than a thousand shareholders who own ordinary shares of the company, the election of members of the board of directors is carried out by cumulative voting - this is a requirement of the law. If a JSC has less than a thousand owners of ordinary shares in the company, cumulative voting is not necessary when choosing the board of directors, but the company itself can provide for it in the charter. When conducting cumulative voting, each voting share of the company must have a number of votes equal to the total number of members of the board of directors (supervisory board) of the company. A shareholder has the right to vote on the shares owned by him in full for one candidate or distribute them among several candidates for members of the board of directors (supervisory board) of the company. The candidates who receive the largest number of votes are considered elected to the board of directors (supervisory board) of the company. It should be noted that if members of the board of directors are elected by cumulative voting, the decision of the general meeting of shareholders on the early termination of powers can be made only with respect to all members of the board of directors (supervisory board) of the company.

Control over the activities of subsidiaries is organized in various ways. It can be of varying depth and degree. Let us consider in more detail the relationship between the "parent company - subsidiary". In accordance with modern management doctrines, the management of the parent structure should not interfere with the current activities of the subordinate subsidiaries acting within the framework of the task, the approved strategy and business plan. They must remain under effective control.

This approach is reflected in the short formula "decentralized operations with centralized control", which became the motto of the management strategy of Western corporations throughout the 70s and 80s.

The paper discusses the main management schemes using the example of joint stock companies. The joint-stock company has a three-tier structure of management bodies. It consists of a general meeting, a board of directors and an executive body.

The board of directors provides general management and sets strategic priorities. He has control functions: approval of estimates and reports, financing and investment programs, control over the staffing table and the level of income of the company's staff. The law on joint-stock companies provides a rather large list of exclusive powers of the board of directors, but all of them are of a strategic and control nature, since operational and economic activities are transferred to the executive body in accordance with the letter and spirit of the law. The Board of Directors meets at periodic meetings. To manage the current activities, an executive permanent body of the company is formed. He is in charge of all current operational and economic work.

In the simplest and most obvious case, the general director of the parent company acts simultaneously as the director of all its subsidiaries and affiliates. This combination of positions is generally acceptable for small and medium-sized businesses. If the number of firms is large enough or the specifics of their work require a large management burden, the transfer of executive powers to third parties is inevitable - employees of the parent company or trustees. There are two possible situations: the subsidiary has co-investors (with significant participation) and they are absent. If there are no co-investors (or their shares are small), all problems are purely technical in nature. If there are co-investors, there are a number of important points to consider.

The system of control over a subsidiary company in the form of a joint-stock company should be carried out both through the board of directors of the subsidiary company and through its executive body. The positions of the chairman of the board of directors and the general director (or similar) in the optimal case should belong to representatives of the main shareholder. In practice, the so-called "cross-directorates" are most often used.

The CEO (or other central company official) often serves as chairman of the board of directors in subsidiaries. A majority on the board of directors must also belong to representatives of the parent company. Certain decisions by law require a unanimous vote of the board members. The board of directors in most cases appoints the general director of the joint stock company.

In the presence of co-investors capable of significantly influencing the activities of the company, the issue of the distribution of management powers is decided in the process of approvals. There are many gradations of the level of influence and options for "balancing" the interests of partners. The problem lies in the fact that this level of participation in capital must be transformed into the corresponding level of authority in the management bodies. Sometimes this bargaining involves factors that are “behind the scenes” of the structure of a given society.

To ensure the "passing" of the commands of the management bodies of the parent company, we briefly examined the organization of the executive structures of the joint-stock company. In accordance with the Law on Joint-Stock Companies, the executive body can be represented by the sole executive body (general director) or jointly by the executive sole and collegial bodies. The general director acts as the chairman of the executive collegial body. The competence of the executive collegial body and its members is determined by the charter and / or special resolutions of the board of directors.

The executive body is formed by the board of directors, unless otherwise provided by the charter. Typically, the articles of association prescribe approval of the CEO by the general meeting. The person performing the functions of the general director cannot simultaneously be the chairman of the board of directors. Members of the executive body of a company cannot constitute a majority on the board of directors. The sole executive body without a power of attorney acts on behalf of the company, i.e. has the right to sign "by definition". The executive body (general director) issues orders and instructions, determines the staffing table, carries out the current management of its activities.

The law also allows for a simpler model. If the company has less than 50 shareholders, then, according to the charter, the functions of the board of directors can be transferred to the general meeting. In this case, the charter must contain an indication of the persons or bodies whose competence includes the convocation of the general meeting. The management of current activities is carried out by the executive body of the company.

So, the "supreme" power in the company belongs to the board of directors of the company and its chairman, and the operational and administrative powers are delegated to the executive body. The balance of powers between them largely depends on the specific situation. In fact, in some cases, the head of the executive body is a person no less influential than the chairman of the board of directors.

The parent company's governance mechanism should seek to control both positions. This control is carried out in different ways. Control over the executive body transfers the levers of day-to-day management of the subsidiary into the hands of the parent company. The chair of the board of directors is essential for strategic leadership. In some cases, it may have a purely nominal value.

For the prompt passage of "vertical" teams, it is necessary to ensure control over the executive body of the subsidiary. It can be organized in such a way that the instructions of the management of the parent company become binding on the subsidiary. The most obvious way is to combine managerial positions: the leaders of the parent company occupy managerial positions in the subsidiary. However, this is not always acceptable. In some cases, those who work for it on a permanent basis should manage the business of a subsidiary. In this case, administrative and legal levers of control over the subsidiary are required.

Article 6 of the Law on Joint Stock Companies states that “the parent company (partnership) is considered to have the right to give the subsidiary the obligatory instructions for the latter, when this right is provided for in the agreement with the subsidiary or the charter of the subsidiary”. Thus, in order for the instructions of the parent company to become binding on the subsidiary, it is enough to introduce an appropriate provision into the charter. It must contain the name of the parent company and a record that its instructions, represented by the relevant management body, are mandatory. Management of a subsidiary or dependent company can be achieved in another way.

In accordance with the legislation, the functions of the executive body (in whole or in part) may be performed by another company (in particular, the parent company). This requires the signing of a special agreement. On behalf of the subsidiary, it is signed by the chairman of the board of directors. The decision to transfer management powers is made by the general meeting of shareholders.

On the basis of the agreement, the executive body of the subsidiary may be a structure formed by the parent company. The right to sign on behalf of the CEO of a subsidiary is vested in the head of the parent company or employees holding his power of attorney. They are on the staff of the parent company and carry out the decisions of its management. As a result, the management of the subsidiary is carried out through the executive office of the parent company.

This is how the complete integration of the management apparatus of the subsidiary and the parent company is achieved. The distribution of competence between them is determined exclusively by the intra-firm administrative regulations. In relation to subsidiaries, the company's management can use the usual direct action tools - orders, instructions, regulations, job descriptions, etc.

If there is a contract of the type in question, the actual status of a subsidiary does not differ much from a branch with similar functions. The personnel of the subsidiary are under direct administrative authority of the management of the parent company. From the point of view of the law, they act as independent subjects of economic relations. The disadvantage of the above options appears to be the formal nature of control over the subsidiary. In some cases, the parent company is not interested in demonstrating its role (and being jointly and severally liable for the operations of the subsidiary). This can be done in other, legal ways.

The parent company can limit itself to general control over the activities of the subsidiary without interfering with its current business practices. There is a wide range of administrative and legal instruments to ensure that the interests of the parent company are respected. For this purpose, authorizing or second signatures, limited powers of attorney for the right to conclude transactions, other schemes and instruments used in global corporate practice can be used. For example, the authorizing signature on contracts of a subsidiary may be delegated to a representative of the parent company by power of attorney. In the power of attorney and the corresponding decision, it is desirable to mention that this right is granted in order to exclude the possibility of causing damage to the parent company. Such a limitation does not imply direct indications of the performance of any actions and does not create conditions of joint liability.

It is possible that the CEO of a subsidiary is formally outside the direct jurisdiction of the parent company. In this case, overall control over the executive body can be exercised through a majority in the board of directors supporting the interests of the parent company. As a result, the parent company will not be jointly and severally liable for the obligations of the subsidiary. General control does not imply interference with the operational activities of the company. Consequently, the responsibility for operational decisions will lie with the daughters of the firm and its executive bodies. The scheme of vertical management of a subsidiary company is as follows (Fig.1.1) .

The existing legislation is flexible enough and allows for organizational and legal maneuver. The required management structure for subsidiaries can be obtained through powers of attorney for the right to sign, resolutions of the governing bodies and special agreements, as well as by making the necessary entries in the articles of association. The key point is the correct execution of powers of attorney for the right to sign.

This legal instrument provides great opportunities for the regulation of administrative relations in the company. There is a possibility of "posting" the right to sign for transactions and execution of payment documents. In this case, any transactions with the company's current account are possible only with the approval of a certain official, for example, the head of the financial department of the parent company. Different modes can be provided for different categories of transactions.

So, when creating child and dependent structures, the following control mechanisms are possible:

Creation of a subsidiary in the form of a branch of the parent company with a certain degree of economic independence;

Creation of a subsidiary company - a new legal entity, which is managed by the parent company under an agreement or charter;

Creation of a subsidiary company whose executive bodies are under the control of the parent company;

	MOTHER FIRM
	GENERAL MEETING OF SHAREHOLDERS
	BOARD OF DIRECTORS
	GOVERNING BODY
	SUBSIDIARY FIRM
	GENERAL MEETING OF SHAREHOLDERS
	BOARD OF DIRECTORS
	GOVERNING BODY

Figure: 1.1 Vertical management of a subsidiary

The management of a subsidiary company can be carried out by controlling the decision-making of the general meeting and the board of directors of this company.

In the first case, the improvement of the management mechanism of the subsidiary is made by a simple administrative decision of the management. In the second, certain legal procedures are required. In the third case, it is necessary to ensure that the necessary decisions are carried out through all levels of management of the dependent company. The first two options mean a very high degree of integration of the assets of the parent and subsidiary companies. The third option can be implemented in the presence of a subcontrolling block of shares, the presence of co-investors, etc.

So, direct operational control over a subsidiary can be carried out by improving the management mechanism:

Combining management positions (cross directorate);

Introduction of relevant provisions into the Charter of the subsidiary;

A special agreement between the parent and subsidiary companies;

Restrictions on the right to sign for officers of a subsidiary;

Introducing a mechanism for a second or authorizing signature for representatives of the parent company;

A simplified mechanism for convening a general meeting, additional powers of the main shareholder.

Various combinations of these approaches are possible. The procedure and conditions for the relationship between the parent company and the subsidiary are determined by legislation, agreements between them, charters and other internal regulatory documents.

The management of a subsidiary can be entrusted to a specialized company. This practice has become widespread in international business. These functions are performed by secretarial companies. They are able to perform not only routine operations, but also fully manage a subsidiary company. Solutions to these problems began to be applied by Russian companies as well.

Remote control is a system of control methods that allows you to control the activities of remote business entities. It provides for the management of the finances and business operations of the subsidiary for the benefit of the owner. Remote management services are provided by secretarial companies and some consulting firms.

Operational management functions cannot be assigned to any company. Such a partnership with a secretarial company is based on mutual trust. Most often, secretarial companies provide standard services to maintain the status or ensure the functioning of a remote company. In this case, the operations center of the secretarial company may be located in the office of the parent company. The secretarial company is able to provide the effect of "presence" in the region, as well as the implementation of certain actions in the interests of the owner. The use of secretarial companies is preferable to an independent search for nominee directors and accountants for a subsidiary operating, for example, in a remote region. However, the functions of the consulting (secretarial) company can be much broader. Such a company, on the basis of a special contract and relevant instructions, can carry out purchasing, transport-forwarding, sales, advertising and other operations. The manager can be delegated discretionary powers, i.e. rights to make certain decisions. The manager is responsible for his actions in accordance with a special contract.

The management contract includes basic and additional services. Basic services include registration and mandatory regular procedures: bookkeeping, auditing, filing financial statements with the tax office, holding general meetings, appointing “nominee” directors and attracting nominee owners.

Additional services include complying with the company's banking and financial requirements, maintaining commercial and trade records, managing operations and affairs for profit, and any other agreed services. Usually, obligations are assumed to inform about all transactions, events and cases affecting the financial or legal status of the company.

The management company is obliged to act in strict accordance with the instructions of the owners. The contract specifies in detail the procedure for the transfer and execution of the instructions of the owners of the company. Basic services are provided at a special rate, additional services are provided on a time basis (this is how the work of the involved specialists is paid). In foreign contracts of a trust (fiduciary) type for the management of a company (property, capital), discretionary powers may be provided: under certain conditions, the manager can make independent decisions. Discretionary powers can be more or less broad. Discretionary decision making, control and responsibility are detailed in a special contract.

The Russian legal system contains several legal instruments that enable the transfer of management functions of a subsidiary to a parent company, its representative or third parties. There are several options for such contracts. Management functions can be delegated to a greater or lesser extent - from the right to conclude individual transactions to management of the company as a "single property complex". Among certain types of transactions provided for by the Civil Code of the Russian Federation, a contract of agency, agency service, trust management of property, and company lease may be applied.

Thus, the management of a subsidiary is associated with a wide range of issues and problems. Not all tasks should be done on your own. In many cases, professional management consultants should be consulted. Specialists of secretarial firms will help to create and register branches and subsidiaries in Russia and abroad, establish their management, draw up registration documents and powers of attorney.