Parent company

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

Overview

The definition of a parent company differs by jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction. A company may be a parent to several different companies, with each of them being a separate legal entity.

Characteristics

A parent company is different from a holding company in that it typically owns a smaller amount of shares and does not exist merely to own shares of other companies. Parent companies often arise from a company spinning off or otherwise divesting itself of a subsidiary.

See also

• Conglomerate (company)
• Keiretsu
• Zaibatsu
• Chaebol
• Cartel
• Multinational corporation

References

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