Parent Company

Parent Company – Parent company is the company that holds ownership or controls subsidiary companies and their operations and management through owning large number of shares.

Such companies hold vast majority of shares in smaller firms in the same or differing industries. Organizations become parent companies by different ways, one is through acquiring small companies and buying their shares, another is creating subsidiaries. For books and accounting purpose, the parent company report the performance results of subsidiary companies on statements that are audited in case the subsidiary company comes under the same corporate organization. In case the parent companies owns multiple subsidiaries that are into different operating businesses, the same is called a business conglomerate.

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Further, if the parent company has several subsidiaries under its umbrella, and any one them is facing financial difficulties, the same can be shut down and it won’t upset the operations or working of any of the other subsidiaries under the parent company.

Edited and Updated 08th March 2014

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