Understanding Subsidiaries: Definition, Types, and Importance

A subsidiary is a company that is controlled by another company, known as the parent company. In this article, we will explore the definition, types, and importance of subsidiaries.

A subsidiary is a separate legal entity from its parent company, but it is controlled by the parent company through ownership of a majority of its shares. This control allows the parent company to make decisions for the subsidiary and influence its operations.

There are several types of subsidiaries, including:

• Wholly-owned subsidiaries: These are subsidiaries where the parent company owns 100% of the shares.
• Partially-owned subsidiaries: These are subsidiaries where the parent company owns a minority of the shares.
• Joint ventures: These are subsidiaries where two or more companies come together to form a new company.

Subsidiaries play an important role in the business world, as they can help companies:

• Expand their operations into new markets or industries.
• Gain access to new technologies or expertise.
• Reduce costs and increase efficiency.
• Enhance their reputation and brand.

In this article, we will delve deeper into the definition, types, and importance of subsidiaries, as well as provide examples and case studies to illustrate their impact on businesses.