|Foreign company subsidiary|
When a company buys another company, the second company usually becomes a subsidiary.
An enterprise controlled by another (called the parent) through the ownership of greater than 50 percent of its voting stock.
What is a Subsidiary Company?
A subsidiary is a business that is wholly or partially owned by another business, sometimes called the parent company or holding company. The parent company owns sufficient voting stock in the subsidiary -- as a rule, at least 50% -- to give it control over the subsidiary's operations and management. In a wholly-owned subsidiary, the parent company owns 100% of the stock.
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.
Types of subsidiary:
There can be two types of it based upon ownership namely
- 100% ownership
- Fully owned subsidiaries (only in FDI permitted sectors as Per latest FDI policy)
- Less than 100% ownership
- Joint Ventures
|Chartered Accountant in Delhi|
This separate legal structure may be used to gain certain tax benefits, track the results of a separate business unit, segregate risk from the rest of the organization, or prepare certain assets for sale. A larger business may own dozens or even hundreds of subsidiary companies.