TeachMeFinance.com - explain holding company
holding company -- a corporation or other entity that owns a majority of stock or securities of one or more other corporations, thus obtaining control of the other corporations. A savings and loan holding company is defined by the National Housing Act as "...any company which directly or indirectly controls an insured institution or controls any other company which is a savings and loan holding company...." Control is defined as owning 25 percent or more of the voting stock.
Holding company -- Same as securities company ; a company which owns the securities of other companies and depends for its income upon the interest and dividends yielded by these securities. It usually issues bonds as well as stock itself. Its bonds are collateral trust bonds, being secured by the bonds or stocks of other companies that it owns. A holding company is not necessarily a controlling company it is not necessary that it should possess a majority of the stocks of the companies whose securities constitute or are included in its assets.
historic accounting definition (British)...
Holding company -- A holding company is one which is formed for the purpose of consolidating, co-operating, preserving, and developing the interests ; promoting economy and efficient organisation in operation ; and harmonising (in some cases) the work of certain other companies, each of which pursues its own particular avocations while retaining its existence as a separate corporate entity, the holding company not being a working or operating undertaking.
The directorate of the holding company is composed of certain of the directors of the subsidiaries concerned therein.
The shareholders, in what ultimately become the subsidiaries of the holding company, exchange their holdings therein for equivalent interests in the holding company, which thus obtains ownership of the entities which are parties to the controlling scheme, and incidentally indirectly become owners of controlling interests in further companies whose capital and other issues are owned by the subsidiaries themselves.
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