what is a wholly owned subsidiary 
a wholly owned subsidiary is a company whose common stock is 100 owned by another company a company may become a wholly owned subsidiary through an acquisition a majority owned subsidiary is a company whose common stock is 51 to 99 owned by a parent company the parent company may opt for majority ownership rather than an outright purchase in order to lower the costs and risks involved in the venture the majority owned company might then be called an affiliate associate or associate company investopedia paige mclaughlinunderstanding a wholly owned subsidiaryhaving a wholly owned subsidiary may help the parent company maintain operations in diverse geographic areas and markets or related industries these factors help the parent hedge against changes in the market or geopolitical and trade practices because the parent company owns all the shares of a wholly owned subsidiary there are no minority shareholders the subsidiary operates with the permission of the parent company which may or may not have direct input into the subsidiary s operations and management this may make it an unconsolidated subsidiary despite being owned by another entity a wholly owned subsidiary may maintain its own management structure clients and corporate culture nevertheless when a company is acquired its employees worry about layoffs or restructuring that happens often as one of the potential benefits to both companies is the opportunity to cut costs by consolidating certain departments although subsidiaries are separate entities they may share some executives or board members with their parent company accounting for a wholly owned subsidiaryfrom an accounting standpoint a wholly owned subsidiary remains a separate company so it keeps its own financial records and bank accounts and tracks its own assets and liabilities any transactions between the parent company and the subsidiary must be recorded both generally accepted accounting principles gaap and the international financial reporting standards ifrs require companies to report the financial data of their subsidiaries if the parent company is public this information can be found in the parent company s consolidated financial statement 1advantages and disadvantages of a wholly owned subsidiarya parent company has operational and strategic control over its wholly owned subsidiaries how it exercises that control has a great deal to do with the success or failure of the partnership 