Wholly Owned Subsidiary

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DEFINITION of 'Wholly Owned Subsidiary'

A company whose common stock is 100% owned by another company, called the parent company. A company can become a wholly owned subsidiary through acquisition by the parent company or spin off from the parent company. In contrast, a regular subsidiary is 51 to 99% owned by the parent company. One situation in which a parent company might find it helpful to establish a subsidiary company is if it wants to operate in a foreign market. This arrangement is common among high-tech companies who want to retain complete control and ownership of their technology.

BREAKING DOWN 'Wholly Owned Subsidiary'

Wholly owned subsidiaries allow the parent company to retain the greatest amount of control, but also leave the parent with all the costs and risks of full ownership. When a lesser number of costs and risks are desirable, or when it is not possible to obtain complete or majority control, the parent company might introduce an affiliate, associate or associate company in which it would own a minority stake.

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RELATED FAQS
  1. Are there any practical differences between a wholly owned subsidiary and a regular ...

    There are differences between a wholly owned subsidiary, or a company 100 percent owned by another company, and a regular ... Read Full Answer >>
  2. How do wholly owned subsidiaries operate in the European Union?

    Regulatory authorities in the European Union (EU) are suspicious of wholly owned subsidiaries, or at least their relationship ... Read Full Answer >>
  3. What is the difference between a subsidiary and a wholly owned subsidiary?

    The difference between a subsidiary and a wholly owned subsidiary is the amount of control held by the parent company. A ... Read Full Answer >>
  4. How can an individual investor get involved in FDIs (foreign direct investments) ...

    The easiest way to get involved in foreign direct investment (FDIs) in Russia is to run a non-Russian company and subsequently ... Read Full Answer >>
  5. What are the differences between affiliate, associate and subsidiary companies?

    All three of these terms refer to the degree of ownership that a parent company holds in another company. In most cases, ... Read Full Answer >>
  6. How can a company execute a tax-free spin-off?

    The two commonly used methods for doing a tax-free spinoff are either to distribute shares of the spinoff company to existing ... Read Full Answer >>
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