Question

Select the proper option from the options given below and rewrite the sentences.

In ________ the parent company makes 100% investment in its equity capital and thus acquires full control over the foreign company.

(a) Contract Manufacturing
(b) Wholly Owned Subsidiaries
(c) Foreign Companies

Answer 1

In wholly-owned subsidiaries the parent company makes 100% investment in its equity capital and thus acquires full control over the foreign company.

Explanation:
A company that wants to acquire full control over a foreign company makes 100% equity investment in the latter company. The company that is acquired is known as wholly-owned subsidiary. Such a subsidiary can be formed in two ways:
i. either by setting up a new company in a foreign country;
ii. or, by acquiring an existing company in the foreign country.
The correct option is B.