What is a subsidiary in contract law?

Written By Stevaughn Bush

What is a Subsidiary?

A subsidiary is a corporation within a chain that starts from the parent company, where each corporation (except the last) holds 50% or more of the voting power in the next. This structure allows the parent company to maintain control and promote:

  • Strategic alignment

  • Resource allocation

  • Operational efficiency

How Can Having a Subsidiary be Helpful?

Subsidiaries create enhance innovation and allow the parent company to manage risks by isolating liabilities. They benefit from the parent company's reputation, gaining access to markets, technologies, and management, which accelerates growth and competitiveness. Overall, the subsidiary model is a strategic tool for expansion and long-term success in a dynamic market. Our office can effectively address any legal questions about subsidiaries. If you have any questions, please fill out the following form below and a Business Lawyer from our office will get back to you.

Stevaughn Bush
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Subsidiary Company: Definition, Examples, Pros, and Cons