What is a subsidiary company?

A subsidiary is a company that is more than 50% owned by a parent company or holding company. Subsidiaries are separate and distinct legal entities from their parent companies. Companies buy or establish a subsidiary to obtain specific synergies or assets, secure tax advantages, and contain or limit losses.

Is a subsidiary a division of a parent company?

A subsidiary functions as a separate legal entity rather than a division of the parent company. It is sometimes referred to as a daughter company. ^ "Daughter Company Definition".

What is a 'wholly owned' subsidiary?

Usually, the parent company will own more than 50% of the subsidiary company. This gives the parent organization the controlling share of the subsidiary. Sometimes, control is achieved simply by being the majority shareholder. When a parent organization owns all common stock of a company, it is known as a ‘wholly owned' subsidiary.