Director FAQ: Subsidiary Governance

In brief: Every incorporated entity must have a board of directors. However, when the entity is a subsidiary of a parent company with a board, the subsidiary may either have its own board or be governed by the parent board. This installment of NACD’s Director FAQ series explores three common scenarios for subsidiary governance and highlights the key legal issues for each scenario.

This resource can help your board

• Define subsidiary control for the purpose of consolidating financial statements
• Determine the subsidiary governance structure that works best for your company
• Manage responsibilities for dual fiduciaries serving both the parent company and the subsidiary

Most relevant audiences: Directors serving on a parent company or subsidiary board