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.

What is the difference between a subsidiary and a holding company?

The owning company, which is called the parent or holding company, usually owns more than 50% of its voting stock (it can be half plus one share more) of the subsidiary. Despite the stake in ownership, the subsidiary and parent companies remain separate legal entities for liability, tax, and regulatory reasons.

What is the difference between a subsidiary and a limited liability company?

Essentially, a subsidiary is a corporation in which a majority (or all) of the shares are owned by another limited liability entity, usually another corporation. It can also be a limited liability company in which a majority of the interests are owned by another limited liability entity.