What is a Subsidiary Company?

A subsidiary company is a business entity that is controlled by another organization through ownership of a majority of its common stock. If the owning entity has acquired 100% of the shares of a subsidiary, the subsidiary is referred to as a wholly-owned subsidiary.

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. The owner of a subsidiary company is referred to as the parent company or a holding company. A parent company may own dozens or even hundreds of subsidiary companies.