Holding - a simple explanation
Holding is a technical term from Economics.
- What is meant is that if a company holds several sub-companies. The parent company is the Holding company and other company subsidiaries. The term describes how a company is structured.
- The principle is that the parent company has capital in the subsidiary, and financially is involved. The individual subsidiaries are, and act autonomously, i.e. under company law and organisation for themselves.
- Usually the parent company itself produces nothing. It holds shares in the subsidiary companies and refers to their profits.
- The advantage of this company structure is the tax savings that can get a company like that. The parent company is seated, for example, in a country where low taxes for business is incurred, it must pay for the profits made by the subsidiary companies, just low taxes.
- Is produced in the subsidiary companies. This can have your seat, then quietly in a country with higher taxes. The profits are not taxed at All, you go to the parent company.
Holding: A company with a subsidiary (image: Pixabay)
Several corporate structures are possible
A Holding company can be organized in several ways.
- Financial Holding company In a Holding company to be managed in the parent company, only the shares in the subsidiaries and the financial resources for this provided.
- Structural Holding: another name for the structural Holding is the organisational Holding. Here, the internal Organisation of a company plays a role. So the parent group can be represented by its daughter companies with several brand names on the market. The Holding company determines, in which he saved people's business and products.
- Operational Holding: this Holding is the parent company "parent group", because it takes a lot more influence on the subsidiaries. The parent, the group manages not only the shares of his daughters, he takes over and determines the largest part of the operating business of the Holding company. He determines the person is an alien, shall appoint, for example, the CEO of a subsidiary. Also the structure and strategy of the subsidiaries are prepared by the parent company, and specified. In this Form, the subsidiaries are not only strong from the tree house group, they are also much smaller.
In the next post we will explain in detail the difference between business administration and Economics.
