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A ancestor aggregation does not accept to be the beyond or "more powerful" entity; it is accessible for the ancestor aggregation to be abate than a subsidiary,citation needed or the ancestor may be beyond than some or all of its subsidiaries (if it has added than one).citation needed The ancestor and the accessory do not necessarily accept to accomplish in the aforementioned locations, or accomplish the aforementioned businesses, but it is aswell accessible that they could conceivably be competitors in the marketplace. Also, because a ancestor aggregation and a accessory are abstracted entities, it is absolutely accessible for one of them to be circuitous in acknowledged proceedings, bankruptcy, tax delinquency, allegation and/or beneath investigation, while the added is not.

The a lot of accepted way that ascendancy of a accessory is achieved, is through the buying of shares in the accessory by the parent. These shares accord the ancestor the all-important votes to actuate the agreement of the lath of the subsidiary, and so exercise control. This gives acceleration to the accepted anticipation that 50% additional one allotment is abundant to actualize a subsidiary. There are, however, added means that ascendancy can appear about, and the exact rules both as to what ascendancy is needed, and how it is achieved, can be circuitous (see below). A accessory may itself accept subsidiaries, and these, in turn, may accept subsidiaries of their own. A ancestor and all its subsidiaries calm are alleged a "group", although this appellation can aswell administer to allied companies and their subsidiaries with capricious degrees of aggregate ownership.

Subsidiaries are separate, audible acknowledged entities for the purposes of taxation, regulation, and liability. For this reason, they adapt from divisions, which are businesses absolutely chip aural the capital company, and not accurately or contrarily audible from it.6

In added words, a accessory can sue and be sued alone from its parent, but its obligations will not commonly be the obligations of its parent. However, creditors of an bankrupt accessory may be able to access a acumen adjoin the ancestor if they can bore the accumulated blind and prove that the ancestor and accessory are simple adapt egos of one another.