subsidiary

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1. Corporation controlled through partial or complete ownership of its voting stock by another company. Bank owned subsidiary companies are reportable in a bank's Report of Condition filed with its primary regulatory agency. A company with 50% or more of its outstanding stock owned, directly or indirectly, by a bank is a majority owned subsidiary. A significant subsidiary of a reporting bank is a company in which the parent bank has a 5% equity capital interest, or a company that contributes at least 5% of the parent bank's gross operating income or 5% of its pretax income (or loss). Banks and other depository financial institutions report income on a consolidated basis, including earnings of subsidiary companies.

2. Corporation, owned by a Bank Holding Company offering nonbanking services, such as equipment leasing or securities underwriting, as approved by the Federal Reserve Board under Section 4(c)(8) of the Bank Holding Company Act. A company owned by a bank holding company, rather than a bank itself, generally is referred to as a bank Affiliate to avoid being confused with bank-owned subsidiaries. The Gramm-Leach-Bliley Act of 1999 permits national banks to establish or acquire subsidiary companies (called financial subsidiaries) that may engage in a broad range of bank-related financial activities, except insurance underwriting, merchant banking, and direct investments in real estate. See also Securities Subsidiary.

adjective

Giving or able to give help or support: accessory, ancillary, assistant, auxiliary, collateral, contributory, supportive. See help/harm/harmless.

noun

A local unit of a business or an auxiliary controlled by such a business: affiliate, branch, division. See part/whole.

adj

Definition: secondary, helpful
Antonyms: central, chief, important, major, necessary, principal

This entry contains information applicable to United States law only.

Auxiliary; aiding or supporting in an inferior capacity or position. In the law of corporations, a corporation or company owned by another corporation that controls at least a majority of the shares.

A subsidiary corporation or company is one in which another, generally larger, corporation, known as the parent corporation, owns all or at least a majority of the shares. As the owner of the subsidiary, the parent corporation may control the activities of the subsidiary. This arrangement differs from a merger, in which a corporation purchases another company and dissolves the purchased company's organizational structure and identity.

Subsidiaries can be formed in different ways and for various reasons. A corporation can form a subsidiary either by purchasing a controlling interest in an existing company or by creating the company itself. When a corporation acquires an existing company, forming a subsidiary can be preferable to a merger because the parent corporation can acquire a controlling interest with a smaller investment than a merger would require. In addition, the approval of the stockholders of the acquired firm is not required as it would be in the case of a merger.

When a company is purchased, the parent corporation may determine that the acquired company's name recognition in the market merits making it a subsidiary rather than merging it with the parent. A subsidiary may also produce goods or services that are completely different from those produced by the parent corporation. In that case it would not make sense to merge the operations.

Corporations that operate in more than one country often find it useful or necessary to create subsidiaries. For example, a multinational corporation may create a subsidiary in a country to obtain favorable tax treatment, or a country may require multinational corporations to establish local subsidiaries in order to do business there.

Corporations also create subsidiaries for the specific purpose of limiting their liability in connection with a risky new business. The parent and subsidiary remain separate legal entities, and the obligations of one are separate from those of the other. Nevertheless, if a subsidiary becomes financially insecure, the parent corporation is often sued by creditors. In some instances courts will hold the parent corporation liable, but generally the separation of corporate identities immunizes the parent corporation from financial responsibility for the subsidiary's liabilities.

One disadvantage of the parent-subsidiary relationship is the possibility of multiple taxation. Another is the duty of the parent corporation to promote the subsidiary's corporate interests, to act in its best interest, and to maintain a separate corporate identity. If the parent fails to meet these requirements, the courts will perceive the subsidiary as merely a business conduit for the parent, and the two corporations will be viewed as one entity for liability purposes.

See: mergers and acquisitions; parent company.

A company whose voting stock is more than 50% controlled by another company, usually referred to as the parent company.

Investopedia Says:
As long as the parent company has more than 50% of the voting stock in the subsidiary, it has control. In the case of a foreign subsidiary, the company under which the subsidiary is incorporated must adhere to the laws of the country in which the subsidiary operates, although the parent company still carries the foreign subsidiary's financials on its books (consolidated financial statements).

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For a list of words related to subsidiary, see:

• Corporations and Business Practices - subsidiary: business owned by parent company
• Reflections and References
• Order, Hierarchy, and Systems - subsidiary: secondary part ranked lower in hierarchy

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See words rhyming with "subsidiary."

  See crossword solutions for the clue Subsidiary.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Common misspelling(s) of subsidiary

• subsiduary
• subsidary

Dansk (Danish)
adj. - hjælpe-, hjælpende, underordnet
n. - forbundsfælle, hjælper, datterselskab

idioms:

• subsidiary company    datterselskab

Nederlands (Dutch)
dochteronderneming, ondergeschikt, ondergeschikt iets/iemand

Français (French)
adj. - secondaire
n. - filiale

idioms:

• subsidiary company    filiale

Deutsch (German)
n. - Tochtergesellschaft
adj. - untergeordnet, subsidiär, Neben-

idioms:

• subsidiary company    Tochtergesellschaft

Ελληνική (Greek)
n. - θυγατρική εταιρεία
adj. - δευτερεύων, θυγατρικός, επιβοηθητικός, επικουρικός, εξαρτημένος, συμπληρωματικός

idioms:

• subsidiary company    θυγατρική εταιρεία

Italiano (Italian)
società affiliata, materia secondaria, dipendente, secondario, sussidiario, ausiliario, accessorio

Português (Portuguese)
n. - subsidiária (f)
adj. - subsidiário

Русский (Russian)
помощник, дочерняя компания, вспомогательный, разменный (о монете), дополнительный

Español (Spanish)
adj. - filial, subordinado, secundario, incidental, subsidiario, tributario, auxiliar
n. - filial, sucursal, asignatura secundaria

idioms:

• subsidiary company    compañía subsidiaria

Svenska (Swedish)
n. - dotterbolag, underordnad, medhjälpare, hjälp
adj. - biträdande, understödjande, subsidiär, understöds-, hjälp-, extra-

中文（简体）(Chinese (Simplified))
辅助的, 附带的, 隶属的, 附设的, 次要的, 贴补的, 子公司, 辅助者, 附加物

idioms:

• subsidiary company    子公司, 附属公司

中文（繁體）(Chinese (Traditional))
adj. - 輔助的, 附帶的, 隸屬的, 附設的, 次要的, 貼補的
n. - 子公司, 輔助者, 附加物

idioms:

• subsidiary company    子公司, 附屬公司

한국어 (Korean)
adj. - 보조의, 보조금의, (보조금으로) 유지해가는
n. - 보조자, 부속물, 제2 주제

日本語 (Japanese)
adj. - 補助の, 従属的な, 副次的な, 支流の
n. - 補助的な人, 副主題

idioms:

• subsidiary company    子会社

العربيه (Arabic)
‏(الاسم) مساعد , تابع , شركه تابعه (صفه) تابع , فرعي‏

עברית (Hebrew)
adj. - ‮עוזר, מסייע, משני, טפל, שכיר (חייל), מקבל תשלום ע"י סובסידיה, נוסף, של תמיכה‬
n. - ‮חברת-בת, עוזר‬

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