Wholly owned subsidiary

Dif.: 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.

- In terms of transaction cost : A wholly-owned subsidiary is a corporation with 100% shares held by another

corporation, the parent company. Although a corporation may become a wholly-owned subsidiary through
take over by the parent company or split off from the parent company. The parent company holds a normal
subsidiary from 51% to 99%.
- In terms of uncertainty :
As the parent company owns all the shares of a wholly-owned subsidiary, minority shareholders are not present.
The subsidiary works with the parent company's approval and may or may not have direct input to the activities
and management of the subsidiary. That could turn it into an unconsolidated subsidiary.
A wholly-owned subsidiary, for example, maybe in a country other than that of the parent company. The
subsidiary most likely has its own executive structure, products, and customers. Having a wholly-owned
subsidiary may allow the parent company to sustain operations in different geographic areas and markets, or
separate sectors. These factors help to cope up with the changes in the market or geopolitical and trade
 practices.

Internal
 Wholly owned subsidiary
In terms of opp.:
1- a parent company has operational and strategic control over its wholly-owned subsidiaries.
2- the parent company may apply its own data access and protection directives to the subsidiary as a way of
reducing the risk of losing other companies' intellectual property.
3- The establishment of a wholly-owned subsidiary, however, can result in the parent company paying too much
for assets, especially if other companies bid on the same business.

Internal