holding company

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holding company:

see corporationcorporation,
in law, organization enjoying legal personality for the purpose of carrying on certain activities. Most corporations are businesses for profit; they are usually organized by three or more subscribers who raise capital for the corporate activities by selling shares
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Holding Company

 

a company that owns a controlling portion of the stock of other companies for the purpose of controlling and managing their operations.

There are two types of holding company: the pure holding company, which confines its functions to the holding of interests in other companies, and the mixed holding company, which in addition carries on its own operations in such areas as industry, trade, transportation, and finance. The holding company is an integral part of the holding system. Holding companies head trusts and large concerns in all capitalist countries; some monopolies, primarily multinational monopolies, are headed by a system of holding companies. The British and Dutch petroleum monopoly Royal Dutch-Shell, for example, is controlled by two holding companies: the British firm Shell Transport and Trading and the Dutch firm Royal Dutch Petroleum. These two corporations own shares in two other holding companies: Shell UK, Ltd., in Great Britain and Shell Petroleum N. V. in the Netherlands, which together own or hold shares in more than 500 companies, either directly or through their subsidiaries. Unilever, a British and Dutch trust that manufactures food products, soap, and perfume, has a similar complex structure.

Holding companies, which may simultaneously comprise such firms as industrial concerns, commercial banks, and insurance companies, represent one of the organizational forms of the financial oligarchy. An example of such an organizational structure is provided by two banks of the Federal Republic of Germany—Deutsche Bank and Dresdner Bank—and the Belgian bank Société Générale de Belgique, which head financial groups of the same names. On the average, each of these banks owns shares in and controls the operations of 150 companies, including finance, investment, insurance, commercial, industrial, and transportation companies and companies in the service sector.

Trusts and large concerns make extensive use of holding companies in their internal organizational structure; by this means they control and direct groups of subsidiaries, which are classified by a distinguishing feature, such as location, economic sector, or commercial activity. For example, Exxon, the largest petroleum monopoly in the capitalist world, includes approximately ten holding companies, which head subsidiaries operating in such areas as Africa and the Middle East. Monopolies often create such holding companies in countries with low tax rates in an effort to maximize profits.

The development of holding companies marks an intensification in the concentration of production and capital, since it fosters the subordination of small and medium-sized companies to large corporations.

I. A. AGAIANTS

References in periodicals archive ?
Generally, these rulings involved cases where the parent corporation did not formally distribute "all of the stock and securities in the controlled corporation.
The parent corporation hires a broker to import its product into Canada and the parent corporation's name is on the import documents.
Consequently, the exchange at original external sale and the exchange for locally manufactured goods both could reasonably be considered purchases of inventory for the parent corporation.
In one case, the Kansas Court of Appeals determined that a bank subsidiary could not deduct interest paid by its parent on indebtedness incurred on the purchase of the bank subsidiary's stock because the parent corporation had been formed for the benefit of the family that owned all of its shares (the holding company was formed for and utilized in the family's attempt to obtain all of the bank's shares).
In other words, die parent corporation must own at least 80% of the stock not owned by another member of the group.
The role of the Delaware corporation was to provide financing for various customer purchases in stores either owned by the parent corporation or by independently owned dealer stores; it owned no property other than cash and receivables, had no offices or employees in or out of Florida, and utilized the offices, property, and employees of the parent corporation in conducting its business.
subsidiaries wholly owned by two or more foreign corporations with a common parent corporation will also be considered members of an affiliated group and thus one taxpayer for purposes of the earnings stripping provisions.
84-152,(38) a Swiss parent corporation owned 100% of both a Netherlands Antilles(39) corporation and a domestic corporation.
Therefore, the separate existence of the subsidiary was honored pursuant to Moline Properties(14) The ruling warned that "where the parent corporation so controls the affairs of the subsidiary that it is merely an instrumentality of the parent, the corporate entity of the subsidiary may be disregarded.
is the parent corporation for Jefferson Federal Bank, which was established in 1963 and is headquartered in Morristown, Tennessee.
The five-year waiting period would generally apply in this situation (unless a waiver were granted) because X Corporation, which was a member of the A-X group (old group) before the merger, would become a member of the B-X group (new group) following the merger and the new group's parent corporation (B) is a successor to the old group's parent corporation (A).
If the parent corporation is in a continuous AMT situation for the foreseeable future, deferring an FSC dividend defers AMT.

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