5B. Definition of wholly owned subsidiary

Question 1

5B. Definition of wholly owned subsidiary

Answer 1

General overview
[5B.01] In contrast to directorial control being the determinant of a holding-subsidiary relationship, the converse, i.e. which is a wholly owned subsidiary of another company, is determined by its membership or ownership.

Question 2

Wholly owned subsidiary

Answer 2

[5B.02] X, is a wholly owned subsidiary of another corporation (Y) if:

(a) Y is the only member or shareholder of X;
(b) Y’s nominee is the only member or shareholder of X;
(c) Y’s wholly owned subsidiary (Z) is the only member or shareholder of X; or
(d) Z’s nominee is the only member or shareholder of X.

Question 3

Discovery of documents

Answer 3

[5B.03] A plaintiff could not obtain against the parent company an order for discovery of certain documents held in the possession of foreign wholly owned subsidiaries as these documents could not be said to be in the “power” of a plaintiff within the English Rules of the Supreme Court, Order 24 rr 2(1) and 3(1), unless he either had in fact to be virtually in possession of them or had to have an immediate indefeasible legal right at the time of discovery to demand possession of them from the person in whose possession they were; that whether a parent company or the head of a group of companies had “power” over documents in the possession of its subsidiaries depended on the facts of each case; and that in the case of the multinational defendant companies, since it appeared that their subsidiaries in Rhodesia and South Africa had local directors with local autonomy who had refused to disclose the documents, the fact that they might own all the shares in the subsidiaries did not mean that they had immediate power over the documents