Definition of subsidiary

1. corporation controlled through partial or complete ownership of its voting stock by another company. Bank owned subsidiary companies are reportable in a bank's report of condition filed with its primary regulatory agency. A company with 50% or more of its outstanding stock owned, directly or indirectly, by a bank is a majority owned subsidiary. A significant subsidiary of a reporting bank is a company in which the parent bank has a 5% equity capital interest, or a company that contributes at least 5% of the parent bank's gross operating income or 5% of its pretax income (or loss). Banks and other depository financial institutions report income on a consolidated basis, including earnings of subsidiary companies.
2. corporation, owned by a bank holding company, offering nonbanking services, such as equipment leasing or securities underwriting, as approved by the Federal Reserve Board under Section 4(c)(8) of the Bank Holding Company Act. A company owned by a bank holding company, rather than a bank itself, generally is referred to as a bank affiliate, to avoid being confused with bank-owned subsidiaries. The gramm-leach-bliley act of 1999 permits national banks to establish or acquire subsidiary companies (called financial subsidiaries) that may engage in a broad range of bank-related financial activities, except insurance underwriting, merchant banking, and direct investments in real estate.

company whose voting stock is more than 50% owned by another firm. For tax purposes, a parent company must own at least 80% of a subsidiary to file a consolidated tax return.

company of which more than 50% of the voting shares are owned by another corporation, called the parent company.