Hope this is fit for Legal.SE. I work with large financial institutions and often obtain diagrams representing the legal entity perimeter (i.e. full list of legal entities, with ownership % and "who owns who").
I have found in multiple occasions that a parent company A will have multiple wholly-owned subsidiaries, some of which will have the following pattern:
- Company A fully owns (100%) company B;
- Company A fully owns (100%) company C;
- Company B owns 99.99% of company D;
- Company C owns 0.01% of company D.
This results in a diamond-shaped ownership structure with the end result being that company A fully owns company D via B and C. I am curious as to what is the legal / business justification for not maintaining full ownership of company D within either B or C.
This was observed both in the US and Canada.