Wholly Owned Subsidiary

Concept:  Wholly Owned Subsidiary
Topic: Indian Economy
Category: Indian Economy and issues, Banking Sector
Related News: Hindu, Feb 28
CNA mentions: 1(Feb 28)

Wholly Owned Subsidiary

A subsidiary company is one that is controlled or owned by another company. The controlling company is called the parent company and the subsidiary is also called the daughter company. It can be a corporation or a limited liability company. It can also be owned by the state or government.

Subsidiaries are separate legal entities for taxation and regulatory purposes. This way, they are different from divisions within a company. Generally, a majority of shares of the subsidiary company are owned by the parent company. A company can also have multiple levels of subsidiaries. That means a subsidiary can also have further subsidiaries under it. In case of multiple levels, the parent company has direct control over the first-tier subsidiaries and indirect control over the subsidiaries in the subsequent levels. A wholly-owned subsidiary is one whose 100% shares are held by the parent company.