What defines a subsidiary company?

A subsidiary company is defined as a company that is controlled by a parent company. This control typically manifests through the parent company's ownership of more than 50% of the subsidiary's voting shares. This structure allows the parent company to influence or dictate the subsidiary's operational decisions and strategic direction while still keeping the subsidiary legally independent in terms of its liability and operations.

Understanding the definition of a subsidiary in this way is crucial because it emphasizes the hierarchical relationship between the parent and the subsidiary, which can encompass financial, operational, and managerial aspects. The parent company may have various subsidiaries across different industries or markets, allowing it to diversify and spread risk while consolidating control over diverse business activities.

In contrast to other choices, a joint venture refers to a collaborative enterprise between two or more parties, typically aimed at a specific project; being owned by shareholders pertains more broadly to company structure rather than the control aspect that characterizes subsidiaries; and a company that provides services to another corporation could simply be a contractor or service provider, not necessarily indicating any ownership or control relationship. Thus, the specificity of the control aspect is what makes the correct definition stand out.