Which aspect of a subsidiary company's identity is retained even within a group of companies?a)Business name and industry.b)Shareholding structure.c)Board of directors' composition.d)Financial performance.Correct answer is option 'A'. Can you explain this answer?

Question

Answer

Business name and industry:
Subsidiary companies typically retain their original business name and operate within the same industry even when they are part of a group of companies. This is important for maintaining brand recognition and customer loyalty. The subsidiary's identity is closely tied to its business name and the industry it operates in.

Shareholding structure:
Although the shareholding structure may change due to the parent company's ownership, the subsidiary company still maintains its own separate legal entity. This means that the subsidiary's shares are held by the parent company, but the subsidiary continues to exist as a distinct entity with its own shareholders.

Board of directors' composition:
While the parent company may have representation on the subsidiary's board of directors, the composition of the board often includes individuals from both the parent company and the subsidiary. This allows the subsidiary to maintain some level of autonomy and decision-making power.

Financial performance:
The financial performance of a subsidiary company is typically tracked separately from the parent company, even within a group of companies. This allows for a clear understanding of the subsidiary's profitability and growth, which is important for assessing its overall value within the group.

Answer

In a group of companies, subsidiary companies retain their identities, including their business names and the industries they operate in. Despite being part of a larger group, they continue to conduct business using their individual names.

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