WRITE THE DIFFERENT BETWEEN HOLDING COMPANY AND SUBSIDY COMPANY?
INTODUCTION
A holding company is a company that owns a controlling interest in one or more other companies, known as subsidiaries. The holding company typically does not operate any businesses itself, but instead, it owns and controls the subsidiaries. This allows the holding company to achieve a number of objectives, such as diversifying the business risk of the parent company, reducing taxes, facilitating international expansion, and protecting the parent company from liability.
A subsidiary company is a company that is owned by another company, known as the parent company or holding company. The parent company typically owns more than 50% of the subsidiary’s shares. This gives the parent company control over the subsidiary’s operations and financial decisions. The subsidiary company’s financial statements are consolidated with those of the parent company.
Difference Between Holding Company And Subsidy Company
Holding company
- Owns a controlling interest in one or more subsidiary companies.
- Typically, does not operate any businesses itself.
- Its primary purpose is to own and control the subsidiaries.
- May be set up to achieve a number of objectives, such as:
- Diversifying the business risk of the parent company.
- Reducing taxes.
- Facilitating international expansion.
Protecting the parent company from liability.
Subsidiary company
- Is owned by another company, known as the parent company or holding company.
- The parent company typically owns more than 50% of the subsidiary’s shares.
- The subsidiary company may operate its own business, but it is ultimately controlled by the parent company.
- The subsidiary company’s financial statements are consolidated with those of the parent company.
Some Examples Of Holding Companies And Their Subsidiaries:
- Holding company: Berkshire Hathaway
- Subsidiaries: Geico, Dairy Queen, BNSF Railway, Lubrizol, Fruit of the Loom, NetJets, and others
- Holding company: The Walt Disney Company
- Subsidiaries: ABC, ESPN, Disney+, Pixar, Marvel, Lucasfilm, and others
- Holding company: Amazon
- Subsidiaries: Whole Foods Market, , Twitch Zappos, Audible, and others
Conclusion
Holding companies and subsidiary companies are two different types of corporate structures that have different purposes and benefits. Holding companies are typically used to own and control other companies, while subsidiary companies are typically used to operate businesses. The key differences between holding companies and subsidiary companies are summarized below:
