How does the subscription information work on IMAP folders?

Is the information stored locally in the client or is it stored on the imap
server?

I ask because I have two instances of Outlook connecting to the same imap
server. One change in the subscribed folders on one outlook, will
eventually propogate to the second outlook client.

Should this be happening? If so, Is it an outlook issue or is it a server
issue?

Thanks.