Show Branches are not exactly same as the subsidiary company. A subsidiary company is a company, whose controlling stake is held by another entity, i.e. the holding company. Both branch and subsidiary company are owned by the parent company but are different in many ways. The article explained below shed light on the differences between branch and subsidiary of a company. Content: Branch Vs Subsidiary
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Definition of BranchBranch is defined as an extension of the parent organisation, which is set up at another location, to increase their coverage. It carries out the same activities as performed by the head office. The officer-in-charge of the branch is known as the branch manager, who is directly responsible for the work of the branch, as well as reports to and take instructions from the head office. Most of the banks and financial institutions have branches that are opened to play the agency role. Setting up branches at various remote locations, increases the customer base, accessibility and also helps in timely and effective distribution of goods and services. Example: The head office of Reserve Bank of India is located in Mumbai, and it has 20 branches (regional offices) which are located in the capital cities. Definition of SubsidiaryThe term subsidiary company is a business entity, whose ownership and control is in the hands of another business enterprise. Usually, when a company buys another company, the buying company, is called as holding the company and the company so bought is the subsidiary. A company is said to be a subsidiary of another if any of the three conditions are satisfied:
Example: If we talk about Reliance Industries Limited, there are various subsidiaries owned by it are: Reliance Jio Infocomm, Reliance Petroleum, Reliance Retail, and so forth. The points given below are noteworthy concerning the difference between branch and subsidiary:
ConclusionTo sum up, branches are set up with the sole aim of increasing the business coverage and facilitating easy distribution of goods and services. On the other hand, owning a subsidiary primarily accounts to expanding the business entity, by purchasing a company operating in similar or different business. Branches and subsidiaries located in the foreign country, follow the rules and regulations of the respective country. What is the difference between a branch office and a subsidiary?The most fundamental difference between a branch and a subsidiary is the percentage of ownership stake. A branch has 100% ownership stakes in its parent company. Whereas in a subsidiary, the ownership is greater than 50%. If a subsidiary is 100% owned, it is referred to as a wholly-owned subsidiary.
What is an international branch office?Branch office: A branch office or an overseas branch is a direct extension of your organization. Its purpose is to help you to generate revenues in a specific region, as a part of your parent company. As it is not its own legal entity, it can support the organization but it doesn't have its own business discretion.
What is an international subsidiary?A foreign subsidiary is a company operating overseas that is part of a larger corporation with headquarters in another country, often known as a parent company or a holding company.
Which is better branch or subsidiary?A subsidiary company is, legally speaking, more complex than a branch office. It is an entirely separate legal entity that has been established by another company to do business in a particular place. To qualify as a subsidiary, a parent company must own more than 50 percent of the entity's voting shares.
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