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a subsidiary, a branch, an office or a division?

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  • a subsidiary, a branch, an office or a division?

    Dear Fellow Users,

    I'm a newbie here. I'm employed temporarily in China and I'm trying to figure out what one could call a company that belongs to a parent company but:

    a) A can take decisions on their own and engage in international construction engineering projects and bidding procedures as it owns all the necessary certificates and qualifications for construction of highways and railways.

    b) B has some limitations and is more dependant on the parent company as it doesn't own the necessary certiticates and qualifications... B can't engage in international bidding procedures on their own but they can take part in bidding procedures independently as long as they do it in China.

    I don't know if one could call any of these companies Limited-autonomy Subsidiary of XYZ China Corp. Ltd. I've read so many definitions of what a subsidiary/branch/office/division is that I'm utterly confused as business law isn't really my cup of tea.

    Kind regards and many thanks for your help!

  • #2
    Any comments would be highly appreciated. Thanks.

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    • #3
      Our best business law responder hasn't been by in a few days. Stand by for him.
      The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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      • #4
        Thanks cbg! I'm gonna follow your advice and wait.

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        • #5
          I see dkstaub is currently on the forum. He is a business attorney in Illinois. He might be able to help you even though you're talking China here.
          Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

          Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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          • #6
            I wish I could say that there is an answer to your question, but at least in the U.S., state corporate law statutes just do not break it down that way. I have no knowledge of how corporate entities are governed in China.

            A subsidiary is a separate corporation whose stock is owned by the parent. Generally, unless its activities are restricted by law or in articles of incorporation, it can do whatever any corporation can do. Like any other corporation, it has a board of directors and officers. Technically, the decisions are made by the directors and officers of the subsidiary, not by the parent corporation. Practically speaking, however, any corporation that owns 100% of a subsidiary can remove any or all of the directors so that if the directors do not follow the directives of the parent, they will soon be ex-directors and the parent will name replacements who it is confident will follow its guidance.

            A division, on the other hand, is not a separate entity at all. It is simply a part of the corporation. While some divisions may be given a great deal of autonomy, ultimately they are controlled by the corporation.

            When it comes to certificates, licenses and other government authorizations, generally those are held only at a corporate level. Rarely will a government agency grant a certificate or license in the name of a division. As a corollary, since a corporation and a subsidiary are separate entities, it would be rare for them to share a certificate or license. Typically, each entity would need its own.

            I know this doesn't directly answer your question, but perhaps it at least provides a little structure for the answer.
            David K. Staub (www.illinoisbusinessattorney.com)
            Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

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            • #7
              Originally posted by Betty3 View Post
              I see dkstaub is currently on the forum. He is a business attorney in Illinois. He might be able to help you even though you're talking China here.
              well, the thing is that my company wants to use proper nomenclature on the international construction engineering market
              Last edited by mesmerized; 08-13-2012, 04:59 PM.

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              • #8
                Originally posted by dkstaub View Post
                I know this doesn't directly answer your question, but perhaps it at least provides a little structure for the answer.
                Thank you dkstaub for a detailed answer.

                Well, that's more or less what I imagined a subsidiary to be... yet, my supervisors keep nagging me to come up with a proper name that can be accepted and used on the international market. I'm not Chinese, I'm European and trained in literature, not business law... The thing is that those companies we're talking about are independent when they operate on the Chinese market but when they want to participate in any international bidding activities then the parent company must represent them... So they're subsidiaries... but when it comes to overseas activity they don't have any autonomy...

                Thus, I called them "Limited-autonomy subsidiaries" but I guess it's just my own creation...

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                • #9
                  Originally posted by mesmerized View Post
                  Thank you dkstaub for a detailed answer.

                  Well, that's more or less what I imagined a subsidiary to be... yet, my supervisors keep nagging me to come up with a proper name that can be accepted and used on the international market. I'm not Chinese, I'm European and trained in literature, not business law... The thing is that those companies we're talking about are independent when they operate on the Chinese market but when they want to participate in any international bidding activities then the parent company must represent them... So they're subsidiaries... but when it comes to overseas activity they don't have any autonomy...

                  Thus, I called them "Limited-autonomy subsidiaries" but I guess it's just my own creation...
                  I've never seen the term before, but it sounds like a reasonable description of the entity as you have outlined it.
                  David K. Staub (www.illinoisbusinessattorney.com)
                  Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

                  Comment


                  • #10
                    Originally posted by dkstaub View Post
                    I've never seen the term before, but it sounds like a reasonable description of the entity as you have outlined it.
                    I'm not a native speaker of English, thus I feel a bit uncertain when it comes to legal terms... If there's any other title/name I could use or you might think would be appropriate... do let me know. Thanks.

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