A subsidiary is a legal entity controlled by another legal entity. Subsidiaries are often used to facilitate international trade, but also to obtain legal protection and to better control the profitability of a business.
For example, a Canadian logistics company creates a subsidiary in the U.S. to hold its American operations, limiting the parent company's legal exposure to U.S. litigation while also enabling the U.S. entity to access local financing and comply with state-level business registration requirements independently.
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