Which term describes a company that is more than 50% owned or controlled by a parent organization in another country?

Which term describes a company that is more than 50% owned or controlled by a parent organization in another country?

• A. Foreign service premiums
• B. Foreign subsidiary
• C. Formalization
• D. Forum shopping

Answer: (B)

When a company is more than 50% owned or controlled by a parent organization in another country, the relationship describes a foreign subsidiary. A foreign subsidiary is a separate legal entity that the parent owns majority of, giving the parent control over strategic decisions and management while the subsidiary operates under the local laws of the country where it’s located. The parent can consolidate the subsidiary’s financial results with its own and is ultimately responsible for its direction, yet the subsidiary remains legally distinct from the parent, which is why the ownership and control concept is key here. This differs from the other ideas: foreign service premiums are about extra pay for international assignments, formalization refers to making processes more formal or standardized, and forum shopping is about choosing a jurisdiction to sue or be sued in. None describe ownership or control of a company by a foreign parent.

When a company is more than 50% owned or controlled by a parent organization in another country, the relationship describes a foreign subsidiary. A foreign subsidiary is a separate legal entity that the parent owns majority of, giving the parent control over strategic decisions and management while the subsidiary operates under the local laws of the country where it’s located. The parent can consolidate the subsidiary’s financial results with its own and is ultimately responsible for its direction, yet the subsidiary remains legally distinct from the parent, which is why the ownership and control concept is key here.

This differs from the other ideas: foreign service premiums are about extra pay for international assignments, formalization refers to making processes more formal or standardized, and forum shopping is about choosing a jurisdiction to sue or be sued in. None describe ownership or control of a company by a foreign parent.