Child Company cash back

[Babajun]

When i have a Child Company. I want a option to get on the Cash from my child company.

In real Life when a company has a parent Copmany, on the end of the year, there is a profit, the child copmany has to give a part of the profit to
the parent company.
Maybe about the Dividend payment-but as a parent copmany i cant change the option of the child company.
As parent company, i cant say to child company to buy back shares.

I dont want to merger, so im thinking about to get some cash from child company but i have no solution? maybe somebody has one for me.

[counting]

In real world there are numerous ways of transfer funds between companies (subsidiaries or not), and a lot of barriers are due to tax evasion or money laundry concerns. And corporations have better way of secure funds than relying on subsidiaries, otherwise its a pure holding company. Most mechanics involved are not implemented at all due to lack of financial sectors in game. Right now the best way is to have subsidiaries pay dividends. (Some already proposed the idea of parent company set dividend, but not implemented yet)

I think the major concern of fund transferring from child->parent company is with current game balance. If allow cash to be transferred freely, essentially the diminishing child company asset would cause stock price diminish, and the parent company can use the extra fund to buy more child company stocks with lower price. This positive feedback can let a company quickly be taken over with minimum penalty, thus create huge incentive for players to neglect production and solely rely on corporate raiding to play the game. Some mechanism to counter the benefit or some fund transferring limitation have to exist for it to work.

[greene345]

The easiest solution here, I think would be to have a sort of swap. If the parent company is getting the money, then the child company should get something in return of equal value. Perhaps the parent company would have to then issue equal stock to all shareholders of child company.

Three separate suggestions: Child Company transfers $10 billion to Parent Company, .....
and Child Company receives $10 billion worth of Parent Company stock.
and existing shareholders of Child Company receives $10 billion worth of Parent Company stock.
and Child Company gets $5 billion and shareholders get the other $5 billion.

All three of the above have their advantages and disadvantages. If the child company owns shares of the parent company, if a merger happens those shares are absorbed by the parent, so that may not be an ideal option for the parent company. If the shares are issued to the shareholders, however, that could hurt the price of the child company and potentially hurt the players' chance of controlling the parent company. The third option would be the most even, I think.

To allow for further protection, I would suggest that any time money is transferred from the child to the parent in this mechanism, the parent should also be prevented from purchasing more shares or divesting of current shares for a certain period, to prevent manipulation. I think that three to six game months would be reasonable.

[counting]

The easiest solution here, I think would be to have a sort of swap. If the parent company is getting the money, then the child company should get something in return of equal value. Perhaps the parent company would have to then issue equal stock to all shareholders of child company.

Three separate suggestions: Child Company transfers $10 billion to Parent Company, .....
and Child Company receives $10 billion worth of Parent Company stock.
and existing shareholders of Child Company receives $10 billion worth of Parent Company stock.
and Child Company gets $5 billion and shareholders get the other $5 billion.

All three of the above have their advantages and disadvantages. If the child company owns shares of the parent company, if a merger happens those shares are absorbed by the parent, so that may not be an ideal option for the parent company. If the shares are issued to the shareholders, however, that could hurt the price of the child company and potentially hurt the players' chance of controlling the parent company. The third option would be the most even, I think.

To allow for further protection, I would suggest that any time money is transferred from the child to the parent in this mechanism, the parent should also be prevented from purchasing more shares or divesting of current shares for a certain period, to prevent manipulation. I think that three to six game months would be reasonable.

Oh, interlocking shareholding, the nightmare of accounting . There is a reason why you are not allow to use you child company's money to buy parent company's stock with current version of the game.

For the record, although interlocking shareholding exist in business, it's generally not for transferring fund, but consolidating corporate group.

[Killerbrandt]

Ok its called a Subsidiary not a child haha (but i know what you mean). In real life a Parent company is allowed to perform cash sweeps anytime they want and it is very common. Also, the Parent company is allowed to buy or sell any assets of a subsidiary if wanted. So, I wish they could make it so we could perform cash sweeps of our subsidiary at anytime.

[counting]

Ok its called a Subsidiary not a child haha (but i know what you mean). In real life a Parent company is allowed to perform cash sweeps anytime they want and it is very common. Also, the Parent company is allowed to buy or sell any assets of a subsidiary if wanted. So, I wish they could make it so we could perform cash sweeps of our subsidiary at anytime.

In some languages (like Chinese, Japanese, etc), subsidiary or daughter/sister company is literally translated as child company, the forum has multinational members, and we all know what it meant.

To my understanding, cash sweeps or cash sweeping is a practical accounting tool (financial tool) to concentrate cash, managing multiple accounts and reduce the transaction costs, however the "ownership" shouldn't change hand. In real life since child and parent companies usually have large transactions between them daily involving many different physical accounts, hence it can be used to delay or advance some cash via a joint account in a short period of time before it has to be balanced.

However I agree with you there are numerous ways of transferring funds between companies in real life (as I stated in previous relies). But the main issue here in-game-wise is we need to have mechanics (maybe like you said to sell/buy assets which AI seldom offer to buy) to clear and balance the book of both child-parent companies, and move "really large" sum between them, not just magically add/subtract numbers from child company's assets to parent's without liabilities. The real problem is if we open the floodgate without a counter balance in game, it will make building real business and firms pointless, as players just have to borrow large sum form the bank and raid some corporations to gain cash to pay back loans, and then simply buyout everyone via stock market.

[Killerbrandt]

Hey there! Yes! you are correct about what subsidiary means in other cultures haha I appologize for any offense. I am way too intrenched in USA pratices haha. Well from where I work you can easily raid a subsidiaries cash anytime you want. You just have to parent side add it to assets (cash) then add it to equity to balance it out on the books. For the sub/child you need to credit assets (cash) then credit Equity to balance it out. it really is not hard. Also, if this is about realsim then companies buy out other companies all the time to get their cash. That is perfectly normal. However, for this game, that really cant happen because like you said, we could just borrow and then raid them. Then there would be no companies left in the game. :/

I am too tired and lazy to look but I think there was a spot where they said they were going to allow Parents to sell land of a subsidiary. I guess that is a start. lol I just wish there was a little more control between the parent and the sub/child. :/

[counting]

I am too tired and lazy to look but I think there was a spot where they said they were going to allow Parents to sell land of a subsidiary. I guess that is a start. lol I just wish there was a little more control between the parent and the sub/child. :/

I forgot to mention, players can already sell the land belong to their subsidiaries, just not every subsidiary has enough land on hand to sell. And the money goes to the subsidiary not the parent, for getting cash from subsidiaries, we need the reverse mechanism to allow them buy land from the parent. Essentially sell land to subsidiaries, but this creates another dilemma where you need to have land on hand in the first place XD. Perhaps some sort of licensing system will work better, without physically transfer ownership between entities.

[GiovanniMartin16]

There is what you call Advances to Subsidiaries or Advances to Parent account on the balance sheet of real companies. Somehow, the subsidiary or parent could loan to each other with or without interest. There's a receivable in one and a payable in another.

[counting]

There is what you call Advances to Subsidiaries or Advances to Parent account on the balance sheet of real companies. Somehow, the subsidiary or parent could loan to each other with or without interest. There's a receivable in one and a payable in another.

Ya, there are numerous terms in accounting to forward funds IRL (legal or not), however, the main issue as I mentioned above, has more to do with game balance. Moving cash from subsidiary without counter-balance will open a floor-gate, and hinder normal business building. Since all you need to do is borrowed a lot of money that can buy 51% of a corporation, borrow more under its name, transfer its fund back, buy the next one, and so on, without doing anything at all. Kinda make the whole game point less.