Subsidiary

A subsidiary is an entity controlled by another company, the parent, typically through holding more than half its voting shares, and is fully combined into the parent's consolidated financial statements.

ByHoang TruongUpdated July 11, 2026

FrameworkIFRS 10

See it move

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A company has 100,000 shares in issue and a parent buys 65,000 of them for €585,000, at €9 each. Those shares represent 65,000 ÷ 100,000 = 65% of the voting rights, comfortably over the 50% threshold, so the investee becomes the parent's subsidiary even though other shareholders still hold the remaining 35,000 shares.

Where it fits

SubjectFinancial AccountingCoreTopicThe Financial StatementsCore

The formula

LaTeX

p_{own} = \frac{S_{parent}}{S_{total}} \times 100

Variables

$p_{o w n}$: Ownership percentage (%)
$S_{p a r e n t}$: Shares held by the parent (shares)
$S_{t o t a l}$: Total shares in issue (shares)

Gives the voting-rights percentage used as the first test of whether an investee is a subsidiary.

Check yourself

PracticeCORE

A company has 250,000 shares in issue. An investor buys 140,000 of those shares for €6 each. What percentage of voting rights does the investor hold, and does the investee become the investor's subsidiary?

Select an answer to check your understanding.