Whollyowned

Wholly owned describes a business ownership arrangement in which a single parent company owns all of the equity interests in another legal entity. The term is most commonly seen in relation to wholly owned subsidiaries, where the parent has 100 percent ownership and full control over governance, strategy, and financial decisions. The arrangement ensures that there are no other owners with voting rights in the subsidiary.

Establishment and structure

A wholly owned subsidiary is typically formed by creating a new company and issuing all its shares to the parent, or by acquiring all outstanding shares from other owners. In most jurisdictions, the subsidiary remains a separate legal entity with its own assets, liabilities, and compliance obligations, while the parent consolidates its financial results with those of the subsidiary for reporting purposes.

Governance and control

Because the parent owns all voting shares, it generally appoints the subsidiary’s board and senior management, directing operations, policies, and resource allocation. While legally separate, the subsidiary often operates as an extension of the parent’s business strategy, branding, and risk management framework.

Financial and tax considerations

Intercompany transactions between the parent and the wholly owned subsidiary are common and are typically eliminated in consolidated financial statements. Dividends and other transfers may be subject to local tax rules, withholding taxes, and transfer pricing regulations, depending on jurisdiction.

Advantages and risks

Benefits include full control, streamlined decision-making, and the ability to align operations with the parent’s objectives. Risks involve regulatory compliance burdens, funding requirements, and potential exposure to liabilities through guarantees or intercompany financing, though the subsidiary’s separate legal personality generally provides liability insulation.

Related concepts

In some contexts, terms such as wholly owned foreign subsidiary (for example, in China’s wholly foreign-owned enterprise) describe similar structures within specific regulatory environments.