Business, Legal & Accounting Glossary
A subsidiary whose parent company owns virtually 100% of its common stock.
A Wholly Owned Subsidiary is a subsidiary undertaking that is fully (100%) owned by a holding company.
In a wholly owned subsidiary there is no minority interest.
A wholly-owned subsidiary is a company whose stock is entirely owned by another company. The owner of a wholly-owned subsidiary is known as the parent company or holding company. Because the parent company owns all of the stock of the wholly-owned subsidiary, the parent company can control all of its activities. Moreover, under GAAP, all of the financial transactions of a wholly-owned subsidiary are consolidated with those of the parent company. Thus, all of the activities of the wholly-owned subsidiary are part and parcel of the parent company for both operating and reporting purposes. Why, then, does a company establish a wholly-owned subsidiary? A wholly-owned subsidiary is a separate entity for legal purposes. Thus the laws of the state or country in which the wholly-owned subsidiary is incorporated apply to the subsidiary, but not the parent company.
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This glossary post was last updated: 26th April, 2020 | 8 Views.