A holding company is a company whose primary business is owning a controlling interest in the stock or ownership shares of other companies, known as subsidiaries. It typically does not produce goods or services itself but exists mainly to control and manage these subsidiaries
. Key characteristics of a holding company include:
- It owns enough voting stock (usually more than 50%) in other companies to control their major decisions and policies, without necessarily managing their day-to-day operations
- It can be a pure holding company, which only holds shares and does not conduct business operations, or a mixed holding company, which also engages in its own business activities alongside managing subsidiaries
- Subsidiaries remain legally independent, which limits liability risks to the holding company, protecting it from financial or legal issues faced by any subsidiary
- Holding companies can hold various types of assets, including intellectual property and real estate, often to protect these assets from litigation or financial risk
- In some jurisdictions, holding companies are also called parent companies, and if they own 100% of a subsidiary, that subsidiary is called a wholly owned subsidiary
Examples of holding companies include Berkshire Hathaway and Alphabet, which own diverse portfolios of subsidiaries across different industries
. Overall, holding companies provide a way to consolidate control, reduce risk, and manage multiple businesses under one corporate group structure
