Holding Company

Holding Company

A holding company is one which remains in possession of sufficient voting shares (not necessarily 51 per cent always) in another company. Needless to say, this power enables the holding company to control the operations of the second company at a significantly reduced cost compared to an official merger.

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This is primarily due to the fact that with enough voting shares at its disposal, it becomes much easier for the holding company to acquire controlling interest (usually by purchasing a fraction of the shares required for a merger).

A holding company can easily exert its influence over management as well as policies within the second (controlled) company.

Edited and Updated 15th February 2014

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