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What is a holding company?

A holding company is also sometimes called an “umbrella” or parent company. A holding company is a type of financial organization that owns a controlling interest in other companies, which are called subsidiaries. The parent corporation can control the subsidiary’s policies and oversee management decisions but doesn’t run day-to-day operations.

What are the benefits of a holding company?

By “holding” stock, the parent company gains the right to influence and control business decisions. Holding companies offer several benefits such as gaining more control at a small investment, retaining the management of the subsidiary firm, and incurring lower tax liabilities. Thank you for reading CFI’s guide to a Holding Company.

Is a holding company the same as a parent company?

A holding company is similar in function to a parent company, however, there is a clear distinction. Although both parent and holding companies own and control subsidiaries, a parent company will usually be a functioning business in its own right.

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