Dochtermaatschappij
Subsidiary company
A subsidiary is a company that is controlled by another company, the parent company, by virtue of the latter holding more than half of the voting rights or otherwise exercising decisive influence.
In Dutch corporate law, a subsidiary is a legal entity that is legally independent but economically and managerially integrated into a group structure. The parent company exercises control over the subsidiary through share ownership or contractual arrangements, with implications for consolidation in the financial statements and liability within the group.
The term is relevant in the context of mergers, acquisitions and group financing, since the subsidiary often continues to exist as a separate entity while the parent determines its strategic direction. In practice, the term is used to denote the hierarchy within a group and to determine which company qualifies as a parent or subsidiary under Book 2 of the Dutch Civil Code and the IFRS rules.
In transactions, lawyers routinely assess whether a subsidiary exists in order to determine whether shareholder or supervisory board approval is required.
“The parent company has recently incorporated a new subsidiary to consolidate its foreign activities.”
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