What does a holding company do?

What a holding company does

Holding is a term from business administration. What a holding company does can be briefly summarized as follows: It does business.

• The holding company, also known as the holding company or holding company for short, is a frequently chosen form of organization of companies. A holding consists of a parent company on the first level, the actual holding company and subsidiaries on the second level, which are independent in terms of corporate law and organization, but in which the parent company has a stake is. Because the parent company holds shares in the subsidiaries, such a company is called a holding, which is derived from the English to hold.
• A holding company, in this case the parent company, does not provide anything ago, but acts as the parent company of several subsidiaries by taking shares in these holds.
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Further explanations about the holding company

A holding company can be organized in different ways, and accordingly there are different forms of holding.

• The parent company has a very strong position in the operational holding company, which is also known as the parent company. The operational holding is a holding company in which the parent company holds a large part of the takes over operational business and strategy, structure and staffing of the mostly much smaller subsidiaries takes over. So these depend very much on the holding company.


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• The parent company has a much smaller influence on the financial holdings, where it only manages the shares of the subsidiaries and does not raise funds operated strategically and at management or strategy holdings, where the parent company coordinates and strategically aligns the subsidiaries, while the subsidiaries handle day-to-day business complete.
• There is also the organizational or structural holding company. It is used for the internal organization of a company, for example to have a better overview of the individual divisions or to be able to act on the market under different names.
• The organization as a holding company brings, among other things, tax advantages, for example if the parent company is based in a country in which a company has little steer have to pay. Often lower taxes have to be paid on the profits transferred to them by the daughters.

So explaining in a relatively clear way what a holding company does is not that easy.