A subsidiary corporation is a company that is controlled by another corporation, known as the parent or employer corporation. This relationship exists when the parent company owns at least 50 percent of the voting stock of the subsidiary. The term is often used in the context of stock options and corporate structures, where it is important to understand the chain of ownership among corporations.
The term "subsidiary corporation" is commonly used in corporate law, particularly in areas related to taxation, mergers and acquisitions, and corporate governance. Understanding this term is essential for businesses that operate multiple entities, as it affects how companies report income and manage liabilities. Users can find relevant legal forms and templates to assist in establishing or managing subsidiary corporations through resources like US Legal Forms.
Here are a couple of examples of abatement:
Example 1: Company A owns 70 percent of Company B. Therefore, Company B is a subsidiary of Company A.
Example 2: Company C is the parent of Company D, and Company D owns 60 percent of Company E. In this case, Company E is a subsidiary of Company D, which is in turn a subsidiary of Company C (hypothetical example).
Examples of state differences (not exhaustive):
| State | Key Differences |
|---|---|
| California | Specific regulations on corporate governance may affect subsidiary operations. |
| New York | Additional reporting requirements for subsidiaries may apply. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Key Differences |
|---|---|---|
| Parent Corporation | A corporation that owns enough voting stock in another corporation to control it. | The parent corporation is the owner, while the subsidiary is the owned entity. |
| Affiliate | A company that is related to another company through common ownership or control. | Affiliates may not have a majority ownership stake, unlike subsidiaries. |
If you are considering forming a subsidiary corporation, it is advisable to consult with a legal professional to understand the implications and requirements. Additionally, users can explore US Legal Forms for templates and resources that can simplify the process of establishing a subsidiary.
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A subsidiary is a separate legal entity owned by a parent company, while a branch is an extension of the parent company and not a separate legal entity.