What is a fellow subsidiary?

By Research Desk
about 9 years ago

A company is considered to be a fellow subsidiary of another company if both are subsidiaries of the same holding company i.e. subsidiary of parent company is a fellow subsidiary.


E.g.: A is the ultimate holding company. B and C are subsidiaries of A. Thus, B is a fellow subsidiary of C and C is a fellow of B. The inter se relationship between the subsidiaries is that of a fellow subsidiary.

The concept of fellow subsidiary is relevant for disclosure purposes. Fellow subsidiaries are ‘related parties’ as per Accounting Standard 18 (AS 18): Related Party Disclosures. The subsidiaries apparently have nothing to do with each other but due to a common parent, there exists a close relationship. Thus, inter-se dealings amongst them should be disclosed in terms of the AS 18 on `Related party transactions'.

Different from Step-down Subsidiary -
It is important to draw attention to the fact that a Fellow is different from a Step-down subsidiary. If S is a subsidiary of B in the above example, then S is a said to be a step-down subsidiary of A (the ultimate holding company). AS 18 covers disclosure related to step-down subsidiaries also.  


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