Subsidiary

Updated: 03/06/2020 by Computer Hope

Also known as a daughter company, a subsidiary is a company that's controlled by another company known as the parent company or holding company. For example, Google is a subsidiary of the conglomerate Alphabet.

The primary benefit of owning a subsidiary company is the ability of the parent company to offset losses in one business with profits in the other. This practice may allow the parent company to reducing the amount of federal or state corporate taxes it is required to pay. Also, if legal action is taken against a subsidiary company, the parent may be excluded or protected from that action.

Note

If 100% of a subsidiary company is owned by the holding company, it's known as a wholly-owned subsidiary.

Business terms, Conglomerate