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SUBSIDIARY COMPANIES (1AS 27)A subsidiary company is a company in which the investing company (also called holding or parent company) controls the financial and operating policies of the subsidiary company.In most cases, control is evidenced (but not limited) to owning more than 50% of the ordinary share capital of the subsidiary company. Control may also be exercised in the following ways;
The substance of the relationship between holding company and subsidiary company is the effectively, the holding company controlls the subsidiary company. This means that the holding company controll the assets of the subsidiary company and is liable to the debts of the subsidiary company.
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