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A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. [1] A holding company usually does not produce goods or services itself. Its purpose is to own stock of other companies to form a corporate group .
According to s.1159 of the Act, a company is a "subsidiary" of another company, its "holding company", if that other company: holds a majority of the voting rights in it, or; is a member of it and has the right to appoint or remove a majority of its board of directors, or
When a bank holding company owns a subsidiary bank, it handles management of the bank, which in turn provides financial products and services to consumers and businesses.
A conglomerate (/ k ə ŋ ˈ ɡ l ɒ m ə r ə t /) is a type of multi-industry company that consists of several different and unrelated business entities that operate in various industries. A conglomerate usually has a parent company that owns and controls many subsidiaries , which are legally independent but financially and strategically ...
A corporate group is composed of companies. The general rule is that a company is a separate legal entity from its shareholders, that is the shareholder's liability for the subsidiary's debts is limited to the value of the shares, [3] and the shareholders cannot be required to perform the company's obligations.
The term carries slightly different meanings depending upon the specific context and industry. A non-operating subsidiary, in contrast, is a subsidiary that exists on paper, but does not have any assets or employees of its own and therefore cannot function independently as a going business concern. Thus, its only actual business "operations ...
A company or firm in which the holding company owns a significant portion of voting shares, usually 20–50% or a "minority of share ownership", is known as an associate company. A company in which the holding company owns more than 50% voting shares or a "majority of share ownership" is known as a subsidiary. The holding company thus can also ...
If one company owns a majority in another company, then the first company is deemed to exert a controlling influence. [1] The parent company is then liable for any damage which results from the interference of the parent company in the subsidiary, which is judged on a case-by-case basis. [4]