Parent company


A parent company is a company that owns enough voting stock in another firm to control management and operation by influencing or electing its board of directors. Companies that operate under this management are deemed subsidiaries of the parent company.

By country

Australia

The parent company–subsidiary company relationship is defined by Part 1.2, Division 6, Section 46 of the Corporations Act 2001, which states:

A body corporate is a subsidiary of another body corporate if, and only if:

Canada

Toronto-based lawyer Michael Finley has stated, “The emerging trend that has seen international plaintiffs permitted to proceed with claims against Canadian parent companies for the allegedly wrongful activity of their foreign subsidiaries means that the corporate veil is no longer a silver bullet to the heart of a plaintiff’s case.”

Singapore

The parent subsidiary company relationship is defined by Part 1, Section 5, Subsection 1 of the Companies Act, which states:

5.— For the purposes of this Act, a corporation shall, subject to subsection, be deemed to be a subsidiary of another corporation, if —

United Kingdom

In the United Kingdom, it is generally held that an organisation holding a 'controlling stake' in a company is in effect the de facto parent company of the firm, having overriding material influence over the held company's operations, even if no formal full takeover has been enacted. Once a full takeover or purchase is enacted, the held company is seen to have ceased to operate as an independent entity but to have become a tending subsidiary of the purchasing company, which, in turn, becomes the parent company of the subsidiary.