Subsidiary

A company that is controlled by another company, usually through ownership of more than half of its shares.

Example

An operating company in the founders' home country wholly owned by a holding company abroad.

Important

Investors in the parent only benefit from a subsidiary's assets to the extent the parent owns it.

Related terms

  • Good standing — The status of a company that is up to date with its required filings and fees at the official company registry.

Lessons that explain it

  • First confirm the company you are investing in is the one that owns the business — Legal diligence starts with structure: where the company is incorporated, whether it is in good standing, which entity holds the customers, contracts and IP, and whether the shares being offered can be issued. (10 min)

All 578 terms in the Investing glossary