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 ?
* The mutual holding company would be legally domiciled in Wisconsin, joining Jewelers Mutual Insurance Company and its other subsidiaries.
Will the action taken by Kuwait Securities Market, regarding the holding company (Ithmmar Holding Company) affect the subsidiary company (Ithmmar Bank) in Bahrain?
It was decided that secretaries of finance, industries and production, and power ministries would be ex-officio members of the holding company with seven more members chosen from the private sector.
This means that a holding company with a lower return on equity as a result of capital expansion will most likely be priced lower by the stock market.
President & Chief Executive Officer of CCF Holding Company Leonard Moreland further stated, "We feel OTCQX best fits the current and future needs of CCF Holding Company.
The new holding company will offer shares of its common stock for sale to the bank's eligible account holders and certain borrowers and to members of the general public in a subscription and community offering in the manner and subject to the priorities set forth in the Plan of Conversion and Reorganization.
In contrast, the Fed's Regulation Y permits stock redemptions of up to 10 percent of the holding company's consolidated net worth in the preceding 12 months without prior approval, with additional flexibility for small, well-capitalized and well-managed holding companies,
Khaled Abdel Badie, chairman of the state-run EGAS, has stated that debts for companies in the business sector exceed EGP 3bn, and that there are some companies like the Holding Company for Spinning and Weaving which refuse to schedule payments for their debts.
It is worth mentioning that the Public Holding Company was formerly owned under the establishment law by the Higher Corporation for Specialised Economic Zones.
The company said that it would simplify its group structure through the creation of the non-operating holding company.
The holding company will only manage the owned companies, without conducting any actual business or commercial transactions.There is also a commercial side which is about earning more reputation by owning more companies and capitals, which in turn will facilitate the process of acquiring new projects, contracts and ownership of other companies through mergers and acquisitions.A holding company is a big corporation that manages and controls other sub-companies, even those in a different field of specialization.