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Wholly Owned Subsidiary
Practical Law Glossary Item 2-382-4239 (Approx. 2 pages)
Glossary
Wholly Owned Subsidiary
A subsidiary whose stock is owned entirely by one stockholder. There are many reasons for a parent company to form a subsidiary that it will wholly own. These include:
- To hold specific assets or liabilities.
- To be used as an operating company of a particular division.
- To shield the company from particular liabilities.
- To make an acquisition.
For more information on forming a new entity, see Practice Note, Forming and Organizing a Corporation and Forming an LLC Checklist.
For more information on forming a subsidiary to make an acquisition see Practice Note, Buyouts: Overview.