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A subsidiary, subsidiary company, or daughter company[1][2][3] is a company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidiary company.[4][5] Unlike regional branches or divisions, subsidiaries are considered to be distinct entities from their parent companies; they are required to follow the laws of where they are incorporated, and they maintain their own executive leadership. Two or more subsidiaries primarily controlled by same entity/group are considered to be sister companies of each other.
Subsidiaries are a common feature of modern business, and most multinational corporations organize their operations via the creation and purchase of subsidiary companies.[6] Examples of holding companies are Berkshire Hathaway,[7] Jefferies Financial Group, The Walt Disney Company, Warner Bros. Discovery, and Citigroup, which have subsidiaries involved in many different fields. More focused companies include IBM, Xerox, and Microsoft; they and their subsidiaries primarily operate within the tech sector. These, and others, organize their businesses into national and functional subsidiaries, often with multiple levels of subsidiaries.
- ^ "daughter company = subsidiary: a company that is completely or partly owned by another company" Longman Business English Dictionary
- ^ "Subsidiary vs. Sister Company: What's the Difference?". Investopedia. Archived from the original on 2019-12-20.
A subsidiary functions as a separate legal entity rather than a division of the parent company. It is sometimes referred to as a daughter company.
- ^ "Daughter Company Definition". Financial Times Lexicon. Archived from the original on 2016-06-25. Retrieved 2013-09-29.
- ^ Burke, Alex (October 26, 2018). "What Is the Difference Between a Subsidiary & a Sister Company?". Small Business - Chron. Archived from the original on 2019-12-21. Retrieved 2015-05-20.
- ^ "Subsidiary Definition & Meaning". Merriam-Webster Dictionary. Archived from the original on 2016-08-20. Retrieved 2015-01-15.
- ^ Drucker, Peter F. (September–October 1997). "The Global Economy and the Nation-State". Foreign Affairs. 76 (5). Council on Foreign Relations: 159–171. doi:10.2307/20048206. JSTOR 20048206. Archived from the original on 2019-10-31. Retrieved 2016-10-14.
- ^ "Links To Berkshire Hathaway Sub. Companies". Berkshire Hathaway Inc. Archived from the original on 2020-04-15. Retrieved 2013-09-29.