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A subsidiary is a company that is owned or controlled by another company, recognized as the parent company. The parent company can own more than 50% of the subsidiary’s shares, or it can have a controlling interest in the subsidiary through other means, such as by having a majority of the seats on the subsidiary’s board of directors.

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Subsidiaries can be set up or acquired by the parent company for a variety of reasons. One reason is to expand the parent company’s operations into new markets. For example, a company that sells software might acquire a subsidiary that sells hardware. Another reason to set up a subsidiary is to reduce risk. For example, a company that operates in a risky industry might set up a subsidiary to operate in a different industry.

Subsidiaries can also be used to gain access to new technologies or expertise. For example, a company that makes cars might acquire a subsidiary that makes electric cars. Finally, subsidiaries can be used to achieve tax benefits. For example, a company might set up a subsidiary in a country with lower taxes.

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