A subsidiary is a smaller company owned by a larger one.
Subsidiaries are created for a variety of reasons. Sometimes it is easier to comply with laws of a state or country with a subsidiary incorporated in that locality. Sometimes subsidiaries are used to downplay the big name ownership of the operation. Liability, union issues, lender requirements, organizational styles, even training ground for executives are sometimes considerations in the decisions. Most major companies are in fact composed of a number of individual corporations for various purposes.
Related Fool Articles
Recent Mentions on Fool.com
- Analysts Are Overlooking GoPro Inc.'s Biggest Growth Markets
- New Study: Consumers Are Ready for Self-Driving Cars
- Where Could Berkshire Hathaway Be in 10 Years?
- It's Official: New Electric Porsche Will Challenge Tesla Motors
- Why Shares of Abengoa SA Plunged 56% in November
- The 3 Most Important Drugs in Inovio Pharmaceuticals' Pipeline