Wholly Owned Subsidiary

A wholly owned subsidiary is a company that is completely owned by another company. The parent company owns 100% of the subsidiary's stock, and the subsidiary is not subject to any other ownership interests.

There are a few reasons why a company might want to create a wholly owned subsidiary. One reason is to isolate the risks of the subsidiary from the parent company. If the subsidiary were to fail, it would not affect the parent company's financial health.

Another reason for creating a wholly owned subsidiary is to expand into a new market. The parent company can create a subsidiary in a new country or region without having to give up control of its operations.

Finally, a company might create a wholly owned subsidiary to take advantage of tax breaks or other government incentives. By creating a subsidiary in a specific location, the company can reduce its tax liability.

There are a few things to keep in mind when creating a wholly owned subsidiary. First, the parent company must file the appropriate paperwork with the government to create the subsidiary. Second, the parent company must provide the subsidiary with the necessary capital to operate. Third, the parent company must oversee the subsidiary's operations to ensure that it is meeting its financial goals.

Overall, a wholly owned subsidiary can be a valuable tool for a company to expand its operations and reduce its risks. However, it is important to carefully consider the pros and cons of creating a subsidiary before making a decision.