Question

A new company was formed. All the directors appointed in the new company were appointed by XYZ Ltd. Thus the new company is a/an _____________of XYZ Ltd.

• A. holding
• B. subsidiary
• C. independent company which has not established business in India
• D. none of the above.

Answer 1

The correct option is B subsidiary

When a company buys another company, the second company usually becomes a subsidiary. A subsidiary company is a company owned and controlled by another company. The owning company is called a parent company or sometimes a holding company.

A subsidiary's parent company may be the sole owner or one of several owners. If a parent company or holding company owns 100% of another company, that company is called a "wholly owned subsidiary." A parent company is simply a company that runs a business and that owns another business — the subsidiary. The parent company has operations of its own, and the subsidiary may carry on a related business. For example, the subsidiary might own and manage property assets of the parent company, to keep the liability from those assets separate or appoint directors of the new company.