Definition of Offshore finance subsidiary

Offshore finance subsidiary

A wholly owned affiliate incorporated overseas, usually in a tax haven country,
whose function is to issue securities abroad for use in either the parent's domestic or its foreign business.

Corporate finance

One of the three areas of the discipline of finance. It deals with the operation of the firm
(both the investment decision and the financing decision) from that firm's point of view.

External finance

finance that is not generated by the firm: new borrowing or a stock issue.

Finance

A discipline concerned with determining value and making decisions. The finance function allocates
resources, which includes acquiring, investing, and managing resources.

Finance Company

Company engaged in making loans to individuals or businesses. Unlike a bank, it does not receive deposits from the public.

Internal finance

finance generated within a firm by retained earnings and depreciation.

International finance subsidiary

A subsidiary incorporated in the U.S., usually in Delaware, whose sole
purpose was to issue debentures overseas and invest the proceeds in foreign operations, with the interest paid
to foreign bondholders not subject to U.S. withholding tax. The elimination of the corporate withholding tax
has ended the need for this type of subsidiary.

Limitation on subsidiary borrowing

A bond covenant that restricts in some way a firm's ability to borrow at
the subsidiary level.

Subsidiary

A foreign-based affiliate that is a separately incorporated entity under the host country's law.

Subsidiary account

An account that is kept within a subsidiary ledger, which in turn
summarizes into the general ledger.

Subsidiary company

A company that is controlled by another company through ownership
of the majority of its voting stock.

Subsidiary ledger

An accounting record giving the detailed transactions in an account; the subtotals of the debits and credits are posted to the control account maintained in the general ledger. It helps to keep the general ledger free of clutter.

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