Nature of subsidiary companies
Introduction to subsidiary companies
- After the subsidiary is formed, the parent company controls its subsidiary in terms of the influence and direct the financial and operating policies of the subsidiary.
- A Singapore Subsidiary Company can have the full ownership of the foreign company and is considered as a separate legal entity.
- The subsidiary company doesn’t have any liability to the foreign company as its liability is limited to the share capital it has subscribed.
A Singapore subsidiary company is a private limited company where the majority shareholder is a corporate entity own by their parent or holding company normally located from overseas jurisdiction. After the subsidiary is formed, there is a relationship between a parent company (simply, a parent) and its subsidiary (or subsidiaries) in which the parent controls its subsidiary in terms of the ability to influence and direct the financial and operating policies of the subsidiary to the benefit and best interest of the parent.
The primary advantage of a subsidiary company is that they are separate entities to their parent companies. The holding/parent company usually controls the subsidiary in terms of influential ability and ability to direct the financial and operating properties of the subsidiary to the benefit of the parent company.