A company is the subsidiary of another, if the latter either owns a controlling stake (usually 50% or more of ordinary shares) or has control of it through other means (such as a management contract that gives it complete control).

The company that has the controlling interest is called the parent company.

When the parent has an interest that falls short of giving it control, but which does give it substantial influence, the company is regarded as an associate rather than a subsidiary.

The group accounts required of the parent company must fully consolidate subsidiaries.

Apart from accounting, the status of a company as a subsidiary or not may affect taxation and have regulatory implications.

Copyright Graeme Pietersz © 2005-2020