What is a Subsidiary Company?

Table of Contents

Share at:

Most people have heard of larger companies buying or starting smaller companies, these smaller companies usually turn into a ‘subsidiary’ of the larger ‘holding company’. It is important to understand if a company is a subsidiary as they might be controlled and financed by a larger company, this will impact decisions by individuals and companies wishing to work with or invest in the subsidiary or holding company.

If you are planning on registering any form of business and are looking to establish a greater legal protection for your business, LawPath can provide quick and simple solutions to register a company.

Need specialised advice regarding your company?

Contact a Lawpath consultant on 1800 529 728 to learn more about company registration, customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

What is a Subsidiary?

There are two types of subsidiaries, these are different based on the level of financial ownership by the holding company. Where a holding company owns 100% of the subsidiary, the subsidiary will be considered a ‘wholly owned subsidiary’. Where a holding company only holds the majority of shares in the company it will just be called a ‘subsidiary’.

Often a subsidiary is created by the parent company in order to expand on the company’s existing products and services. It may also be because the parent company plans to strategically buy out another competing or upcoming company.

Because of the level of ownership, the holding company can have a major input into the management and running of the subsidiary. Generally, the holding company will appoint the directors of the subsidiary who will make the decisions for the company. Although directors will owe an obligation to the subsidiary, they will still be somewhat controlled in their decision making by a holding company who owns the majority share interest in the company.

Conclusion

If you are thinking of starting or investing into a company that may be considered a subsidiary, it is crucial to understand where your investment lies. LawPath can help you register a company through an easy to use, online application. For more information on parent companies, read our guide on ‘What are Ultimate Holding Companies?’.

Ready to register a company? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from one our network of 750+ expert lawyers or any other legal needs.

Find the perfect lawyer to help your business today!

Get a fixed-fee quote from Australia's largest lawyer marketplace.

Share at:

Simplify creating legal documents today

Browse through Lawpath's AI tools which can be used to draft, review and refine legal documents today!

Related Articles

Inheritance and Estate Taxes in Australia: An Explainer

Taxes are a part of everyday life for people living in Australia. Read this article to find out how inheritance and estate taxes work.

Running a Cash Only Business? Tips for Keeping Track for Tax

Cash only businesses are fairly common. This does not mean they are tax exempt. Keep reading to find out how a business should keep track for tax.

Tax Considerations to Make if You Want to Start a Partnership

Thinking about starting a partnership? Read this guide to find out what tax implications are involved and how they could affect you as an individual.

What Are Franking Credits? Preventing Double-Taxation on Australian Investments

Worried about double taxation on your dividends? Learn about franking credits and how they protect your income.

What Assets Are Taxable Under The Capital Gains Tax (CGT)?

Whether you run a business or plan to sell assets, it's important to know when the Capital Gains Tax (CGT) applies to you.

What Can You Claim on Tax? (2026 Update)

When lodging your tax return, there are expenses you can claim including costs relating to work, tax management and donations. Find out more here.