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[Latin subsidiārius, from subsidium, support. See subsidy.]
subsidiarily sub·sid'i·ar'i·ly (-âr'ə-lē) adv.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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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
noun
Definition: secondary, helpful
Antonyms: central, chief, important, major, necessary, principal
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.
A subsidiary, in business, is an entity that is controlled by another entity. The controlled entity is called a company, corporation, or limited liability company, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that an individual cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. While individuals have the capacity to act on their own initiative, a business entity can only act through its directors, officers and employees.
The most common way that control of a subsidiary is achieved is through the ownership of shares in the subsidiary by the parent. These shares give the parent the necessary votes to determine the composition of the board of the subsidiary and so exercise control. This gives rise to the common presumption that 50% plus one share is enough to create a subsidiary. There are, however, other ways that control can come about and the exact rules both as to what control is needed and how it is achieved can be complex (see below). A subsidiary may itself have subsidiaries, and these, in turn, may have subsidiaries of their own. A parent and all its subsidiaries together are called a group, although this term can also apply to cooperating companies and their subsidiaries with varying degrees of shared ownership. When ownership is not shared, so that a subsidiary is wholly owned, it is called a branch. A subsidiary is different from a branch in that the former is jointly owned by the parent company and others while the latter is completely owned by the parent company.[citation needed]
Subsidiaries are separate, distinct legal entities for the purposes of taxation and regulation. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it.
Subsidiaries are a common feature of business life and few if any major businesses do not organise their operations in this way. Examples include holding companies such as Berkshire Hathaway[1], Time Warner, or Citigroup as well as more focused companies such as IBM, or Xerox Corporation. These, and others, organize their businesses into national or functional subsidiaries, sometimes with multiple levels of subsidiaries.
An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity, locomotives and rolling stock.
In contrast, a non-operating subsidiary would exist on paper only (i.e. stocks, bonds, articles of incorporation) and would use the identity and rolling stock of the parent company.
The word "control" used in the definition of "subsidiary" is generally taken to include both practical and theoretical control. Thus, reference to a body which "controls the composition" of another body's board is a reference to control in principle, while reference to being are able to cast more than half of the votes at a general meeting, whether legally enforceable or not, refers to theoretical power. The fact that a company has a holding of less than 51% which, because the holdings of others are widely dispersed, gives effective control is not enough to give that company 'control' for the purpose of determining whether it is a subsidiary.
In Australia, for instance, the accounting standards defined the circumstances in which one entity controls another. In doing so, they largely abandoned the legal control concepts in favour of a definition that provides that 'control' is "the capacity of an entity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of another entity so as to enable that other entity to operate with it in pursuing the objectives of the controlling entity." This definition was adapted in the Australian Corporations Act 2001: s 50AA.[1][not in citation given]
The subsidiary can also be made with the intent to defraud the investor, and therefore a court should keep in mind as to for what reasons the subsidiary has been made.
This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)
Dansk (Danish)
adj. - hjælpe-, hjælpende, underordnet
n. - forbundsfælle, hjælper, datterselskab
idioms:
Nederlands (Dutch)
dochteronderneming, ondergeschikt, ondergeschikt iets/iemand
Français (French)
adj. - secondaire
n. - filiale
idioms:
Deutsch (German)
n. - Tochtergesellschaft
adj. - untergeordnet, subsidiär, Neben-
idioms:
Ελληνική (Greek)
n. - θυγατρική εταιρεία
adj. - δευτερεύων, θυγατρικός, επιβοηθητικός, επικουρικός, εξαρτημένος, συμπληρωματικός
idioms:
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:
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:
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:
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:
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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 | Dictionary. The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2007. Published by Houghton Mifflin Company. All rights reserved. Read more |
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| Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved. Read more |
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| Law Encyclopedia. West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved. Read more |
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| Wikipedia. This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Subsidiary". Read more |
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