[4][5] Unlike regional branches or divisions, subsidiaries are considered to be distinct entities from their parent companies; they are required to follow the laws of where they are incorporated, and they maintain their own executive leadership.
More focused companies include IBM, Xerox, and Microsoft; they and their subsidiaries primarily operate within the tech sector.
Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation and liability.
For this reason, they differ from divisions which are businesses fully integ rated within the main company, and not legally or otherwise distinct from it.
Conversely, the parent may be larger than some or all of its subsidiaries (if it has more than one), as the relationship is defined by control of ownership shares, not the number of employees.
Not only is it possible that they could conceivably be competitors in the marketplace, but such arrangements happen frequently at the end of a hostile takeover or voluntary merger.
Also, because a parent company and a subsidiary are separate entities, it is entirely possible for one of them to be involved in legal proceedings, bankruptcy, tax delinquency, indictment or under investigation while the other is not.
The ownership structure of the small British specialist company Ford Component Sales, which sells Ford components to specialist car manufacturers and OEM manufacturers, such as Morgan Motor Company and Caterham Cars,[12] illustrates how multiple levels of subsidiaries are used in large corporations: The word "control" and its derivatives (subsidiary and parent) may have different meanings in different contexts.