Holding company

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A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own stock of other companies to create a corporate group. Holding companies may conduct trade and other business activities themselves. Holding companies reduce risk for the shareholders, and can permit the ownership and control of a number of different companies. They can be subsidiaries in a tiered structure. Holding companies are also created to hold assets such as intellectual property or trade secrets that are protected from the operating company. That creates a smaller risk when it comes to litigation. In the United States, 80% of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed. That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay taxes on dividends paid by Company B...

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