What is a Parent Company?
A parent company has control of the management and operations of a subsidiary company. It is also referred to as "holding company."
How Does a Parent Company Work?
A parent company may be involved in the ownership and control of the subsidiary company for a variety of reasons. For example, a parent company may have spun off the subsidiary into a new separate company to reduce the overhead and streamline the operating costs. Alternatively, a parent company may buy shares as well as control of a company to enable it to integrate and coordinate its activities with other subsidiary businesses under the control of the parent company.
Why Does a Parent Company Matter?
Sometimes, a parent company will create subsidiaries for tax and liability purposes, creating separate entities with legal and financial shields to protect it the parent company from recourse or liability. However, tax and legal treatment of parent companies differs among countries and should be understood and considered.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Suppose you own stock in a company, and it’s announced that the company is buying another company. As...Read More →
In a workforce in which employees often are instructed to do more with less, it seems "work-life balance" has become almost synonymous with job satisfaction. This three-...Read More →
Imagine a country where everyone owns everything outright -- cars, houses, fishing boats, flat-screen TVs. There are no mortgages and no credit card balances in this...Read More →
When it comes to figuring out credit scores, there are very few things that are obvious. Really, I spend a lot of time following this stuff and sometimes...Read More →