Regulations for subsidiary companies
What is the share ownership of a subsidiary?
To be considered a subsidiary, there must be a minimum 50% of share ownership by their foreign parent or holding company. It also means that the minimum parent share ownership is between 50% to 99% only.
The remaining 1% to 50% of the shares can be held by either an individual or corporate legal entity such as a partnership, sole proprietorship or any other legal entity.
If the parent has 100% share ownership of their subsidiary, it is considered a wholly owned subsidiary. The differences lie in the percentage of shares ownership and this will affect the accounting, legal influence, licensing of the subsidiary. For example, in Singapore, to qualify for most of Singapore government funded grants or incentives, there is a rule that 30% ownership must be a local company or an individual.
Parent has 100% ownership of subsidiary, called fully owned subsidiary.
Parent has 70% ownership of subsidiary, called partially owned subsidiary.
Parent has 25% ownership of subsidiary, called associate subsidiary.