tütarettevõtet

Tütarettevõtet, often translated as a subsidiary company, is a business entity that is owned or controlled by a parent company. The parent company typically holds a majority of the subsidiary's voting stock, giving it significant influence over the subsidiary's operations and strategic decisions. Subsidiaries can be established for various reasons, including market expansion, diversification, or to isolate specific business risks.

The legal and financial relationship between a parent company and its subsidiary is distinct. While the parent company has control, the subsidiary often maintains its own legal identity, management structure, and financial statements. This separation can offer advantages such as limiting the parent company's liability for the subsidiary's debts or obligations. However, it also requires careful management to ensure alignment with the parent company's overall objectives.

The formation of a subsidiary can occur through acquisition, where the parent company buys an existing business, or through the creation of a new entity. The degree of autonomy granted to a subsidiary can vary. Some subsidiaries operate with a high degree of independence, while others are more tightly integrated into the parent company's operations. Reporting structures and intercompany transactions are key aspects of managing this relationship effectively. The overall strategy and governance framework are typically set by the parent company, with the subsidiary responsible for execution within its designated area.