A subsidiary company is one that is wholly or partially owned by another company or corporation.
The parent company gains control over the subsidiary company by holding the majority of voting shares within that company. Being a majority shareholder grants the company a seat as member of the board of directors, a group responsible for deciding the major issues concerning the shape and direction that the subsidiary company takes.
Subsidiary companies can acquire or become parent companies for other companies while still remaining under the ownership of a much larger, more powerful company.
- What is a Wholly-Owned Subsidiary? Wise Geek, 2008-09-30.