Eternity Law International News Registration of a Subsidiary

Registration of a Subsidiary

Published:
January 26, 2020

A subsidiary, or DP, is a company whose sole founder is another organization. In other words, the subsidiary is not a branch of the parent company, although it is entirely dependent on and subordinate to the founder.

DP is a full-fledged legal entity, and therefore an independent taxpayer. A parent company can only be called a holding company when it has a controlling stake in the subsidiary. Both companies have organizational and economic responsibilities.

The parent company (together with reports on its business operations) provides consolidated financial statements.

It also determines the charter of a subsidiary, gives it the right to use the property, a number of powers, functions. So, it has its own bank accounts, a seal and a separate balance. It concludes contracts itself and is responsible for fulfilling the obligations specified there.

There are two types of dependence of a subsidiary on the main one:

  1. Decisive.A relationship is established between the two companies, where the parent company controls and the subsidiary company reports.A controlling stake is concentrated in the hands of the main organization, it participates in meetings and other governing bodies, authorized capital. This type of relationship is possible if there is a permission from the Antimonopoly Committee.
  2. Simple.A subsidiary of an enterprise does not have the right to make decisions independently – without the participation of the parent organization.

Documentation for setting up a subsidiary

In order to register a subsidiary the founding company must submit documents to the government registrar, including a duly completed application for permission to register the subsidiary.

Subsidiary registration procedure

All issues related to the creation, termination of activities, liquidation of a subsidiary, as well as the approval of its charter, are in the competence of the supreme bodies of the parent company.

The process of registering a subsidiary follows the same principles as when creating any other legal entity.

Features of creating a subsidiary

  1. A company can register a subsidiary as an organization with foreign investment.
  2. The authorized capital of a subsidiary is formed in such a way that the parent company acquires (in exchange for part of its assets) corporate rights.
  3. All permitted types of activities are prescribed in the charter of a subsidiary (some may be radically different from those in which the parent company is engaged).
  4. Information about the newly created subsidiary is covered in the media and is reflected in the document on the state registration of the subsidiary.

Eternity Law International specialists will provide you with qualified advice on registering a company in Ukraine, opening a bank account.

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