In today’s world, every company has a common strategy to expand their business at the national or international level by raising branches at different places. Branches are referred to as part of the parent organization, who look after the same business operations as performed by the parent company to increase their business.
A subsidiary company is a firm where another holding company entity holds a controlling stake. Branch and subsidiary companies are both governed by the parent company, but they are different.
Subsidiary company is referred to as the firm who fully controls the interest held by another company.
Subsidiary company reports to holding company
Subsidiary company has a wish to conduct the same business as the parent organization
Subsidiary company has a separate standing
Subsidiary company have separate account record
Subsidiary companies are registered under Companies right, 2013. It is usually a private limited company for a closely related shareholding.
Subsidiary company has limited company
In subsidiary company, parent company holds more 50 % of ownership
Advantages Of Foreign Subsidiary Company
Branch refers to a set up by the parent company, to perform the similar business in different areas.
Branch directly reports to head office
Branch follows the same business as a parent organization
Branch does not have separate standing
Branch holds a separate or joint account as it is up to it
Companies incorporated outside India include different activities. It can set up a branch office in India with approval of the Reserve Bank of India (RBI).
For branch the liabilities are extended to parent organization
In branch the parent organization has 100% ownership
Advantages Of Foreign Subsidiary Company
Branch is extensive, and they enrol all over the country. So, they gain the profit of large-scale operations.
Branch has much more capital than the unitary branch, so they never suffer from the constraints of insufficient capital.
branches are efficiently managed, have adequate resources, and an adequate system that reduces operating costs.
one can withdraw many deposits from the public, resulting in greater investment capacity.
The services of the branches are much better to build public confidence.
In the branch system, the losses of one branch can be offset against the profits of other branches.
branches require more staff to work in different departments, divisions, and branches, creating employment opportunities.
It is helpful for large companies to satisfy customer needs for face-to-face communication. A branch is a brand exposure which can positively influence a company's assets.
subsidiary is a separate legal entity for tax, regulation, and liability purposes. Parent companies can benefit from owning subsidiaries because it can give assets to acquire and control companies that manufacture components needed to produce their goods.
branches assemble with the sole aim of increasing the business coverage and facilitating effortless circulate of goods and services. On the other hand, governing a subsidiary company primarily accounts to grow the business entity by purchasing a firm operating in a similar business. Branches and subsidiaries situated in the foreign country follow the terms and conditions of the respective country.
