1. Property ownership: Before allowing a subsidiary company to use the parent company's property, it is important to confirm that the parent company has legal ownership of the property. This can be done by checking property deeds and other legal documents.
2. Asset valuation: The subsidiary company should also assess the value of the property they are intending to use. This helps to ensure that the asset they are using is not undervalued or overvalued and that the subsidiary is getting a fair deal.
3. Written agreement: A written agreement should be drawn up between the parent company and the subsidiary company outlining the terms of use and duration of the property usage. This will help to avoid any disputes in the future.
4. Asset maintenance: The parent company should be responsible for maintaining the asset in good condition throughout the period of use by the subsidiary company. Maintenance costs should be adequately accounted for in the written agreement.
5. Compliance with regulatory requirements: The parent company must ensure that the property complies with all regulatory requirements such as land use regulations, safety regulations, environmental regulations, among others.
6. Insurance coverage: The parent company should have adequate insurance coverage for the property to protect it in case of damage or loss during usage by the subsidiary company.
