Unrestricted Subsidiary

An unrestricted subsidiary is a term used in the context of financing (e.g., bond indentures and credit agreements). It refers to a subsidiary that is excluded from the covenants (i.e., restrictions or promises) of the parent company’s financing agreements. Unlike ‘restricted subsidiaries,’ which must comply with various limits (such as not taking on too much debt or not selling assets without approval), unrestricted subsidiaries have the freedom to operate outside those rules.