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A subsidiary, subsidiary company, or daughter company [1] [2] [3] is a company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidiary company.
[3] [7] Subsidiarity is a general principle of European Union law. In the United States of America, Article VI, Paragraph 2 of the constitution of the United States is known as the Supremacy Clause. This establishes that the federal constitution, and federal law generally, take precedence over state laws, and even state constitutions. [8]
s.c. (spółka cywilna): "civil law partnership", itself neither a proper legal entity nor a juridical person, as it is the partners (natural persons) who retain their separate statuses as entrepreneurs and legal entities, albeit bound by an agreement on the sharing of profits, losses and ownership of a business (common pool of assets).
A corporate group is composed of companies. The general rule is that a company is a separate legal entity from its shareholders, that is the shareholder's liability for the subsidiary's debts is limited to the value of the shares, [3] and the shareholders cannot be required to perform the company's obligations.
Subsidiarity is balanced by the primacy of European Union law. The principle of subsidiarity is premised from the fundamental EU principle of conferral, ensuring that the European Union is a union of member states and competences are voluntarily conferred by Member States.
Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation and liability.For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it.
A non-operating subsidiary, in contrast, is a subsidiary that exists on paper, but does not have any assets or employees of its own and therefore cannot function independently as a going business concern. Thus, its only actual business "operations" may consist of its officers entering into contracts with other corporate entities (which may or ...
When used to provide support for a subsidiary's actions, a letter of comfort usually consists of three terms: [4] A statement from the parent organization acknowledging that its subsidiary has entered into a contract. A promise that the parent organization will not sever its legal relationship with the subsidiary until contractual terms are ...