Operating subsidiary

This article does not cite any sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Operating subsidiary" – news · newspapers · books · scholar · JSTOR (December 2019) (Learn how and when to remove this message)

An operating subsidiary is a subsidiary of a corporation through which the parent company (which may or may not be a holding company) indirectly conducts some portion of its business. Usually, an operating subsidiary can be distinguished in that even if its board of directors and officers overlap with those of other entities in the same corporate group, it has at least some officers and employees who conduct business operations primarily on behalf of the subsidiary alone (that is, they work directly for the subsidiary). The term carries slightly different meanings depending upon the specific context and industry.

A non-operating subsidiary, in contrast, is a subsidiary that exists on paper, but does not have any assets or employees of its own and therefore cannot function independently as a going business concern. Thus, its only actual business "operations" may consist of its officers entering into contracts with other corporate entities (which may or may not be within the same corporate group) to borrow their assets or employees.