A company structure where one company, known as the parent, owns 100% of the stock or equity in another company. This relationship gives the parent company complete control over the subsidiary’s operations and assets. For example, if Company A acquires all outstanding shares of Company B, Company B becomes the wholly owned subsidiary of Company A.
This structure offers several advantages, including streamlined decision-making processes, greater control over intellectual property and branding, and the potential for tax benefits depending on the jurisdictions involved. Historically, this model has been utilized for expansion into new markets, diversification of business activities, and consolidation of market share within specific industries. The complete ownership eliminates potential conflicts of interest between shareholders and allows for full integration with the parent company’s strategic goals.
