tütarettevõte

Tütarettevõte is an Estonian term that translates to "subsidiary company" in English. It refers to a company that is owned or controlled by another company, known as the parent company. The parent company typically holds a majority of the subsidiary's voting stock, giving it the power to influence or dictate its operations and management.

Subsidiaries are often established for strategic reasons, such as to separate different business lines, expand into new markets, or manage specific assets or liabilities. They can operate independently to a degree, with their own management teams and corporate structures, but ultimately answer to the parent company. This relationship allows the parent company to diversify its holdings, mitigate risks, and leverage the specialized expertise or resources of its subsidiaries.

The legal and financial implications of a subsidiary can vary depending on jurisdiction and the specific corporate structure. Generally, a subsidiary is a distinct legal entity, meaning it has its own liabilities and obligations separate from the parent company. However, in certain circumstances, the parent company may still be held responsible for the actions or debts of its subsidiary, a concept known as piercing the corporate veil. Understanding the dynamics between parent and subsidiary companies is crucial for investors, regulators, and business strategists.