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Regarding the effect of a wholly-owned subsidiary's success on a parent companies Share-price...

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The difference between a subsidiary and a wholly owned subsidiary is the amount of control held by the parent company.

A subsidiary company has 50% or more of its voting stock controlled by another company, though for liability, tax and regulatory reasons, the subsidiary and parent companies remain separate legal entities. The parent company is typically a larger business that often has control over more than one subsidiary. Parent companies may be more or less active concerning their subsidiaries, but they hold a controlling interest to some degree. The amount of control the parent company chooses to exercise usually depends on the level of managing control the parent company awards to the subsidiary company management staff.

A subsidiary company is considered wholly owned when all of the common stock is owned by another company, the parent company. With a wholly owned subsidiary, the company's stock is not traded publicly. It remains an independent legal body, a corporation with its own organized framework and administration. Its day-to-day operations are likely directed entirely by the parent company, however.

The setup of a wholly owned subsidiary is advantageous in a number of ways. In some countries, licensing regulations make the formation of new companies difficult or impossible. If a parent company acquires a subsidiary that already has the necessary operational permits, it can begin conducting business sooner and with less administrative difficulty. Another advantage of wholly owned subsidiaries is the potential for coordination of a global corporate strategy. A parent company usually selects companies to become wholly owned subsidiaries that it considers vital to its overall success as a business.


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