Jurisdiction(s):
United Kingdom

Key definition

Subsidiary definition

What does Subsidiary mean? In legal practice, a subsidiary is a company controlled by another company (its holding company), usually through voting power or the ability to appoint a majority of directors. The term is used in corporate and finance documents to delineate group companies, guarantees, covenants and reporting obligations. In the UK, Companies Act 2006, section 1159, defines subsidiary. A company is a subsidiary if another company: holds a majority of its voting rights; or, being a member, can appoint or remove a majority of its directors; or, being a member, controls a majority of its voting rights by agreement. Two of these tests...

Audit Exemption for Subsidiaries under the Companies Act 2006 (ss 479A–C): Conditions, Exclusions, Parent Guarantee and UK Listing Rules

Published by a LexisNexis Corporate expert

Practice notes

Where a company produces annual accounts for a financial year, an audit is required unless an audit exemption applies.

qualifying subsidiary exemption from the requirement to audit accounts

A subsidiary that meets specific criteria may claim an exemption from auditing its individual accounts for a given financial year. The necessary conditions are:

it is a subsidiary undertaking
its parent undertaking is constituted under the law of any part of the United Kingdom
every member consents to the exemption for the financial year concerned
its parent undertaking provides a guarantee for that financial year under section 479C of the Companies Act 2006, namely a statement guaranteeing all of the subsidiary’s outstanding liabilities at the end of the financial year until they are settled in full, which is enforceable against the parent by any person to whom the subsidiary is liable in respect of those liabilities
it is included in the consolidated accounts prepared by the parent for that financial year, or to an earlier date within that year, in accordance with:

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Web page updated on 21/05/2026

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