Holding Company

A holding company is a company which does little else but have holdings in other companies in the group! In other words it's a company which has been established with the sole aim of owning the whole, or a substantial part, of the share capital of one or more other companies or group of companies.

So, if ABC plc is a conglomerate with interests in (say) three main business sectors, let's say agriculture, mining and media, it's structure may be a follows: ABC Holdings plc is the main company at the top of the 'hierachy'. It maintains the head office and other key functions for the group. ABC Holdings plc then owns (say) 100% of each of the operating businesses which could be known as ABC Agriculture Limited, ABC Mining Limited and ABC Media Limited.

As accountants and corporate financiers will tell you, there are lots of reasons for organising business with such a structure!

See Also: Online share dealing service Stockmarket Centre

Last Updated: August 2007 © Moneyextra.com

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