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Parent company Brother/Sister concern Father/Mother company

Parent Company / Parent Corporation

A Parent company is a company that:
- holds (owns) more than 50% shareholding or voting stock of another company; or
- controls the Board (Board of Directors) of another company either by electing directors or by way of its influence.

Example

(1) ABC Limited owns 53% shareholding in XYZ Limited.
ABC Ltd is the parent company of XYZ Ltd.

(2) KPO Limited elects all the directors in BPO Limited.
KPO Ltd is the parent company of BPO Ltd.

A.k.a.

Holding company and parent company are similar terminologies.


Daughter Company

A 'daughter company' is owned or controlled by a parent company.

The term 'daughter company' is popularly referred to as subsidiary company in many countries.

Example

TYU Limited owns 66% shareholding in PLD Limited.
TYU Ltd is the parent company of PLD Ltd.
PLD Ltd is the daughter company of TYU Ltd.

Mother Company

A 'Mother Company' carries similar meaning that of a Parent company.

A mother company owns a number of other companies, which may be in a similar line of business or totally other streams of business.

Example

GPL Limited owns 58% shareholding in MNU Limited and 67% in JOT Limited.
GPL Ltd is the mother company of MNU Ltd and JOT Ltd.

Sister Company / Sister Concern Company

When more than one company is under the management of a single company (a Parent company); they will be called as sister companies/ sister concerns to each other.

Example

DOG Limited is the parent company of RAT Limited and CAT Limited.
Hence, RAT Ltd and CAT Ltd are sister concerns or sister companies.

A.k.a.

Under the law in some countries, sister companies are termed as subsidiary companies of their parent company.

Note:
Generally, a sister company, by its terminology, does not have any legal recognition/significance. However, as a subsidiary company, these companies will have to comply with the rules and regulations prescribed for them.


Father Company

A Father company too has similar meaning like a Parent company.

A father company is a company, which owns one or more companies.

Example

TRG Limited owns 71% shareholding in KLY Limited and 63% in REF Limited.
TRG Ltd is the father company of KLY Ltd and REF Ltd.

Brother Company

When the business of two or more companies are operated under the same group of companies, they are called brother companies.

Brother Company is not a popular term as compared to the above terms. It is very rare that two or more companies are called brother companies.

The term 'brother companies' is more popular in Japan as compared to 'sister concerns'.

Example

WED Limited owns 85% shareholding in BRD Limited and 90% in GRM Limited.
WED Ltd is the parent company of BRD Ltd and GRM Ltd.
BRD Ltd and GRM Ltd are brother companies.
BRD Ltd and GRM Ltd are operated under the WED group of companies.

Comments

  1. Michele Alboreto08 August, 2018

    Very interesting terms. Thanks for the brief explanations on them!

    ReplyDelete
  2. Shyam Bhargava18 April, 2020

    Sister concerns are two or more different entities owned by the same shareholder. The shareholder could be an individual or an organization.

    ReplyDelete
  3. can you give the example for brother companies??

    ReplyDelete

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