subsdiarys

Subsidiaries are legally distinct entities that are controlled by a parent company, usually through majority ownership of voting stock. Control is presumed when the parent holds more than 50% of the subsidiary's voting shares or otherwise has the practical ability to direct its operations and finance.

A parent can own a wholly owned subsidiary (100% ownership) or hold a majority stake with minority holders. In some cases, control may be achieved by seat on the board or contractual arrangements, even without majority equity.

Subsidiaries maintain their own legal identities, boards, and management, but financial statements are consolidated with the parent’s for reporting purposes. In consolidation, intercompany transactions and balances are eliminated to present the group as a single economic entity.

Subsidiaries can be located domestically or abroad, enabling risk isolation, regulatory compliance, tax planning, and local market access.

Differences with other entities: an affiliate refers to a company in which the parent owns a significant minority stake but not control; a branch is not a separate legal entity but an extension of the parent. Joint ventures are separate legal entities jointly owned by two or more parents, often for specific purposes.

Regulatory and accounting regimes (such as IFRS and US GAAP) require consolidation of subsidiaries that meet control criteria. The corporate veil generally protects parents from liabilities arising in a subsidiary, subject to exceptions like piercing the corporate veil in cases of fraud or improper separation.