Definition of a Subsidary Company
Definition of a Subsidiary Company as Listed with UK Companies House
A subsidiary company in the UK is a company that is controlled by a parent company. According to UK Companies House, a subsidiary is defined as a company in which another company (the parent) owns more than 50% of the shares or controls more than 50% of the voting rights. Alternatively, a company can also be classified as a subsidiary if the parent company has the authority to appoint or remove the majority of the board of directors.
This company type is important for businesses that operate under a corporate group structure, where the parent company exercises control over its subsidiaries. The subsidiary definition is essential for understanding legal obligations, particularly regarding financial reporting and corporate governance.
Subsidiaries must adhere to specific reporting requirements under UK law, including preparing financial accounts. In some cases, subsidiaries may be eligible for company filing exemptions, especially if their financials are included in the parent company’s consolidated accounts.
Recent legislation, such as the Economic Crime (Transparency and Enforcement) Act 2022, has reinforced the importance of transparency in group structures, requiring subsidiary companies to disclose Persons of Significant Control (PSC) and adhere to other corporate governance regulations.
Useful Links
- Companies House – Subsidiary Company Guidance A detailed guide on how subsidiaries should prepare and file their accounts, including potential exemptions for group companies.
- Companies House – Persons of Significant Control (PSC) Learn how subsidiary companies must report Persons of Significant Control (PSC), ensuring transparency in corporate ownership.
- Economic Crime (Transparency and Enforcement) Act 2022 An important piece of legislation affecting UK companies, requiring subsidiaries to disclose ownership and control structures.
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