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A wholly owned subsidiary is a company whose entire stock is held by another company, called the parent company. The subsidiary usually operates independently of its parent company with its own senior management structure, products and clients rather than as an integrated division or unit of the parent.
Wholly owned subsidiaries allow the parent company to diversify, manage, and possibly reduce its risk. In general, wholly owned subsidiaries retain legal control over operations, products, and processes.
A popular example of a wholly owned subsidiary system is Volkswagen AG, which wholly owns Volkswagen Group of America, Inc. and its distinguished brands: Audi, Bentley, Bugatti, Lamborghini (wholly owned by Audi AG), and Volkswagen.
The difference between a subsidiary and a wholly owned subsidiary is the amount of control held by the parent company.If the parent company owns 51% to 99% of another company, then the company is a regular subsidiary. If the parent company owns 100% of another company, then the company is a wholly owned subsidiary.
The wholly owned subsidiary can operate under the indirect control of the tax-exempt company and perform activities that are unrelated to the mission of the tax-exempt organization. The subsidiary would be subject to federal income taxes, while the parent company keeps its tax-exempt status.
A wholly owned subsidiary is a company completely owned by another company.Disadvantages include the possibility of multiple taxation, lack of business focus, and conflicting interest between subsidiaries and the parent company.
A wholly-owned subsidiary is a corporation with 100% shares held by another corporation, the parent company. Although a corporation may become a wholly-owned subsidiary through take over by the parent company or split off from the parent company.