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Legal Terms-Holding Company
Definition:
A parent company that owns sufficient shares in one or more subsidiary companies to control their policies and management.
Legal Implications:
Holding companies do not necessarily produce goods or services themselves — instead, they exist to own, control, and manage other companies through majority shareholding.
A holding company may:
- Control board appointments.
- Influence financial and strategic decisions.
- Benefit from limited liability, protecting the parent from direct responsibility for a subsidiary’s debts (except in cases of fraud or misrepresentation).
Example:
If Company A owns 75% of Company B, then B becomes A’s subsidiary, while A is legally recognized as a holding company under the Companies Act 2006
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