What defines a subsidiary company?

A subsidiary is a company whose controlling interest, typically over 50% of its voting shares, is owned by another company, known as the parent company.

What is the primary difference between a subsidiary and an affiliate?

A subsidiary is majority-owned and controlled by a parent company, whereas an affiliate is partially owned (typically 20-50%) but not majority-controlled by another company.

Do subsidiaries operate as separate legal entities?

Yes, subsidiaries are generally distinct legal entities from their parent company, meaning they have their own assets, liabilities, and legal obligations.

Why do companies establish subsidiaries?

Companies establish subsidiaries for various reasons, including market expansion, limiting liability, tax efficiency, ring-fencing specific operations, and acquiring new technologies or expertise.