Parent company

A parent company, sometimes called a holding company, is a corporation that has subsidiaries which are wholly or partially-owned separate businesses controlled by the parent. Although corporate law varies from one country to another there are several ways in which a parent company can create a subsidiary. One method is a takeover, in which the company acquires at least 51% of the stock in another company. This majority share ensures that the parent controls the subsidiary. It is also possible to buy another company outright or to create a new company which is owned by the parent entity. When a parent corporation owns a subsidiary completely and there are no minority shareholders, the subsidiary is known as a wholly owned subsidiary. Sometimes a parent company is structured as a holding company. Holding companies are created specifically to hold subsidiaries and do not produce any products or provide services. People own shares in the holding company, but not any of the companies it controls, making it easier to control the subsidiaries and to do things like selling or spinning off subsidiary properties. Holding companies may be created for the purpose of protecting investors and also for allowing multiple companies to be controlled under the ownership of a parent, rather than merging with each other. See holding company; sister company; subsidiary.

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