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Q: What kind of business entity can own a subsidiary? ( Answered 5 out of 5 stars,   1 Comment )
Question  
Subject: What kind of business entity can own a subsidiary?
Category: Business and Money > Small Businesses
Asked by: cyntlhiadiane-ga
List Price: $5.00
Posted: 26 Dec 2003 15:47 PST
Expires: 25 Jan 2004 15:47 PST
Question ID: 290483
What exactly is a subsidiary company?  What kind of business entity
can own a subsidiary?  Assume this is eCommerce over the Internet.

The following example is only an analogy.  For example, suppose I want
to sell shoes over the Internet and I call my company "Shoes" which is
an umbrella company for other shoe companies.  So if you went to my
website *shoes.com* you would see links to my other companies
"AthleticShoes.com", "DressShoes.com", etc.

In other words, I and my business partner would have contol over all the
companies.  Or I would have control over "AthleticShoes" and my
partner would control "DressShoes".  Again, this is not the real
company or product -- just a
simple example of what I want to do.

Thank you.

--C.D.
Answer  
Subject: Re: What kind of business entity can own a subsidiary?
Answered By: serenata-ga on 26 Dec 2003 17:27 PST
Rated:5 out of 5 stars
 
Hi Cyntlhiadiane ~

As a general rule, a "subsidiary" is a business which is wholly owned
or controlled (or at least over 50% owned or controlled) by another
company.


Here's a definition from Merriam-Webster's Dictionary of Law 1996 on
the FindLaw.com site:

     "... a company having the majority of its stock owned
      by another company (compare affiliate)
      Note: The parent company of a subsidiary generally has
      the same policy-making powers as any majority owner and
      can do such things as appoint directors and hire
      officers. The subsidiary is controlled by the parent
      through these powers, and the parent may be held liable
      for the acts of the subsidiary if the subsidiary is
      found to be an instrumentality of the parent."
   - http://dictionary.lp.findlaw.com/scripts/results.pl?co=dictionary.lp.findlaw.com&topic=1b/1ba67ff5a5585fa3f3c4a962e20f3a64



Or Black's Law Dictionary:

     "Subsidiary. Under ano ther's control. Term is often
      short for "subsidiary corpopration"; ie., opne that is
      run and owned by another company which is called the
      "parent".

     "Subsidiary corporation. One in which another corporation
      (i.e., parent) owns at least a majority of the shares,
      and thus has control. Said of a company more than 50
      percent of whose voting stock is owned by another."
   - Source: Black's Law Dictionary, Fifth Edition


If you want other definitions (most of which reflect the above
information), you might want to try Google's definition search, by
entering "define:subsidiary" (without the quotation marks) in Google's
search bar.
   - ://www.google.com/search?hl=en&ie=UTF-8&oe=UTF-8&q=define%3Asubsidiary&btnG=Google+Search


To answer your question ~ a corporation, partnership, or other company
can own a subdiary company; but to be regarded a subsidiary, at least
51% of its ownership must be by the 'parent' company. The distinction
being that the subsidiary is its own entity, and not just a 'part' of
the parent company.

Thus, you can have "XYZ Company, a wholly owned subsidiary of ABC
Company" or "XYZ Company, a subsidiary of ABC Company" which has its
own individual business structure, yet it's controlling interest is
ABC Company.


Search Strategies ~

  Google search - "define:subsidiary"
  Black's Law Dictionary "subsidiary, subsidiary corporation"


Best regards,

Serenata
Google Answers Researcher
cyntlhiadiane-ga rated this answer:5 out of 5 stars
I was surprised and quite pleased with the *definition* links. 
Invaluable research resources.

Comments  
Subject: Re: What kind of business entity can own a subsidiary?
From: serenata-ga on 05 Jan 2004 13:24 PST
 
Thank you for the kind remarks.

Happy New Year to you!

Serenata

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