Holding Company Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Holding Company, written in plain English, along with examples of how it is used.
What is Holding Company?
(n) Holding Company is the body corporate which holds or otherwise owns and control of all or majority of the equity share capital of another body corporate and fully controls the management of the later.
History and Meaning of Holding Company
A holding company is a corporation that holds a controlling interest in one or more companies. Holding companies are also known as parent companies as they own and controls other companies called subsidiaries. The primary purpose of a holding company is to control various companies, usually with distinct operations or functions, under one corporate umbrella, reducing overall risk to the shareholders.
Holding companies have been around for centuries, and their popularity grew in the 21st century. They were first formed primarily to gain control of competing companies by purchasing their shares in the stock market. Later, they began to acquire companies in the same industry or other industries, which provided synergy or cost-savings.
Examples of Holding Company
Berkshire Hathaway Inc, owned by Warren Buffet, is a holding company that wholly owns or has major stakes in multiple companies, including GEICO, Duracell, BNSF Railway Company, and Dairy Queen.
Alphabet Inc, the parent company of Google, owns multiple companies, including Google, YouTube, Android, and Waymo.
Comcast Corporation, founded by Ralph J. Roberts and Julian A. Brodsky, is a media and technology conglomerate that owns NBCUniversal, DreamWorks Animation, Xfinity, and several other subsidiaries.
Legal Terms Similar to Holding Company
Parent Company - A parent company is synonymous with a holding company. It is a company that owns enough voting stock in another company to control its management and operation.
Subsidiary - A subsidiary is a company controlled either directly or indirectly by a holding company or a parent company.
Conglomerate - A conglomerate is a corporation that consists of several different, independent companies engaged in unrelated business activities. However, a holding company usually has related or similar businesses in its subsidiaries.