A subsidiary company which works for a parent company, but it has its own independent commercial affairs

Question

What do AmE native speakers call a subsidiary / sister company which works together with parent company when each one of these companies has its own directing manager and, aside from the fact that they work independently for themselves, the subsidiary company cooperates with the parent one (something like a financial / commercial department of the parent company)? The only terms which come to my mind are

• Cooperating company

• Collaborating company

• Associated company

PS. I do not want to convey the message of being a subsidiary company. Actually I need to imply only a connotation of cooperation. I don;t know why, but somehow I am sure that no one of the above suggestion work in this purpose. What are your suggestions?

Answer 1

I don't think there are ‘official’, legally-defined terms for these relationships; there are far too many subtle differences between one situation and another. But a real-life example of use within one company may help.

I have a client—let’s call it X-USA—which is a regional subsidiary of an international holding company—let’s call that one X-Global. X-Global also owns subsidiaries in other regions: X-SouthAmerica, X-Europe, X-AsiaPacific and X-Africa.

X-Global trades in commodities produced around the world, so these subsidiaries often deal with each other: for instance, X-USA sells US commodities to X-SouthAmerica and buys South American commodities from X-SouthAmerica. In these transactions, the subsidiaries cooperate in some respects: for instance, payments from one subsidiary to another are handled basically by bookkeeping entries at the X-Global level, and of course they are all, in the end, dependent on the overall profitability of X-Global. In some respects, however, they must for legal reasons act ‘at arm’s length’, as if they were unrelated; and X-Global does not direct either subsidiary’s operations in these respects.

Internally, X-USA refers to the other subsidiaries as affiliates.

X-USA also has joint-venture agreements with companies outside the X-Global family; for example, X-USA and another company jointly operate a loading facility for seagoing vessels. These relationships are governed not by the companies’ common ‘parentage’ but by specific contracts between them. Internally, X-USA refers to the other companies as partners.

Answer 2

If the subsidiary company has been created or exists solely to substitute for a department of a larger company, that's something like "internal outsourcing" and "financial outsourcing company" (continuing with your example) may be appropriate.

Another option: two business entities that work together, but are not controlled by one another, could be referred to as "partners" and the relationship referred to as a "partnership" - "partner company" would also be appropriate it.

Answer 3

I think the word you want is "subsidiary". :-) The word "subsidiary" does not imply that the company is totally controlled by and integrated into the parent company. If it was, it wouldn't really be a subsidiary, it would be a "division" or "branch" of the parent company.