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.


References in periodicals archive ?
The discussions in this section assume that the hook stock is held by a direct or indirect subsidiary of the parent corporation and that the parent corporation and subsidiary are members of a consolidated group.
Because a hook stock shareholder would not incur a negative adjustment on distributions of parent corporation stock, the hook stock shareholder may not eliminate the dividend, and must instead generally recognize dividend income on the intercompany distributions (assuming the parent corporation has earnings and profits).
The parent corporation also does not want to be the importer of record and does not want to pay the Division III tax on importation.
i) The subsidiary cannot recover Division III GST paid on the importation of the parent corporation's products since the subsidiary is not providing any service to the parent corporation and thus is not using those products in the subsidiary's commercial activity.
141) in which service of process on an officer of a subsidiary corporation doing business in New York is adequate to subject foreign parent corporation to New York jurisdiction.
The subsidiary's New York customers ordered merchandise through a brochure produced by the parent corporation, received the goods via commercial carrier or the U.
45) A Canadian parent corporation purchased debentures from, and made a capital contribution to, its Dutch finance subsidiary.
The overriding factor cited in the letter rulings for securing a waiver is that the parent corporation must be able to represent that the disaffiliation and reconsolidation will not secure for any affiliated group, member of the affiliated group or person the benefit of any deduction, credit or other allowance that would not have been secured had disaffiliation and reconsolidation not occurred.
267(a)-3 and the earnings-stripping rules, an advance from a foreign parent corporation to its U.
The preferred solution may be the formation of an agreement between the IRS and the common parent corporation, sometimes called a "Sutton Agreement," under which the Service would agree not to assess and collect the consolidated tax liability against the subsidiary, pending the outcome of the bankruptcy court proceedings, in exchange for the common parent's agreement not to rely on the stay of proceedings under Section 362(a)(6) of the Bankruptcy Act.
as the parent corporation, will change its name to "NTL Incorporated";
BHI is in the process of creating a parent corporation, which will fund seed capital for a start-up continuing care retirement community in the greater Indianapolis area.

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