Subsidiary

Not to be confused with Subsidiarity or Subsidy.

A subsidiary, subsidiary company or daughter company[1][2][3] is a company owned or controlled by another company, which is called the parent company or holding company, which has legal and financial control over the company.[4][5] Two or more subsidiaries that either belong to the same parent company or having a same management being substantially controlled by same entity/group are called sister companies. The subsidiary will be required to follow the laws where it is headquartered and incorporated. It will also maintain its own executive leadership.

The subsidiary can be a company (usually with limited liability) and may be a government-owned or state-owned enterprise. They are a common feature of modern business life, and most multinational corporations organize their operations in this way.[6] Examples of holding companies are Berkshire Hathaway,[7] Jefferies Financial Group, The Walt Disney Company, Warner Bros. Discovery, or Citigroup; as well as more focused companies such as IBM, Xerox, and Microsoft. These, and others, organize their businesses into national and functional subsidiaries, often with multiple levels of subsidiaries.

  1. ^ "daughter company = subsidiary: a company that is completely or partly owned by another company" Longman Business English Dictionary
  2. ^ "Subsidiary vs. Sister Company: What's the Difference?". Investopedia. Archived from the original on 2019-12-20. A subsidiary functions as a separate legal entity rather than a division of the parent company. It is sometimes referred to as a daughter company.
  3. ^ "Daughter Company Definition". Financial Times Lexicon. Archived from the original on 2016-06-25. Retrieved 2013-09-29.
  4. ^ Burke, Alex (October 26, 2018). "What Is the Difference Between a Subsidiary & a Sister Company?". Small Business - Chron. Archived from the original on 2019-12-21. Retrieved 2015-05-20.
  5. ^ "Subsidiary Definition & Meaning". Merriam-Webster Dictionary. Archived from the original on 2016-08-20. Retrieved 2015-01-15.
  6. ^ Drucker, Peter F. (September–October 1997). "The Global Economy and the Nation-State". Foreign Affairs. 76 (5). Council on Foreign Relations: 159–171. doi:10.2307/20048206. JSTOR 20048206. Archived from the original on 2019-10-31. Retrieved 2016-10-14.
  7. ^ "Links To Berkshire Hathaway Sub. Companies". Berkshire Hathaway Inc. Archived from the original on 2020-04-15. Retrieved 2013-09-29.