A holding company is a company that owns other companies' outstanding stock. A holding company usually does not produce goods or services itself; rather, its purpose is to own shares of other companies to form a corporate group. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies. In the United States, 80% of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed. That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay taxes on dividends paid by Company B to its stockholders, as the payment of dividends from B to A is essentially transferring cash from one company to the other. Any other shareholders of Company B will pay the usual taxes on dividends, as they are legitimate and ordinary dividends to these shareholders. Sometimes a company intended to be a pure holding company identifies itself as such by adding "Holding" or "Holdings" to its name.
1 United States
1.1 Banking 1.2 Utilities 1.3 Broadcasting 1.4 Personal holding company
2 Parent company 3 See also 4 References 5 External links
Further information: Bank holding company
After the financial crisis of 2007–08, many U.S. investment banks
converted to holding companies. According to the Federal Financial
Institutions Examination Council's (FFIEC) website, JPMorgan Chase
& Co., Bank of America Corp., Citigroup Inc., Wells Fargo &
Co., and Goldman Sachs Groups, Inc. were the five largest bank holding
companies in the finance sector, as of 31 December 2013, based on
Public Utility Holding Company Act of 1935 in the United States
caused many energy companies to divest their subsidiary businesses.
Between 1938 and 1958 the number of holding companies declined from
216 to 18. An energy law passed in 2005 removed the 1935
requirements, and has led to mergers and holding company formation
among power marketing and power brokering companies.
Further information: Media conglomerate
In US broadcasting, many major media conglomerates have purchased
smaller broadcasters outright, but have not changed the broadcast
licenses to reflect this, resulting in stations that are (for example)
still licensed to
Jacor and Citicasters, effectively making them such
as subsidiary companies of their owner iHeartMedia. This is sometimes
done on a per-market basis. For example, in
Gross income test: At least 60% of the corporation's adjusted ordinary
gross income is from dividends, interest, rent, and royalties.
Parent company Main article: Parent company A parent company is a company that owns enough voting stock in another firm (subsidiary) to control management and operations by influencing or electing its board of directors. A parent company could simply be a company that wholly owns another company, which is then known as a "wholly owned subsidiary". When an existing company establishes a new company and keeps majority shares with itself, and invites other companies to buy minority shares, it is called a parent company. See also
Berkshire Hathaway Conglomerate Conglomerate discount Keiretsu Investment company List of holding companies Patent holding company
^ I.R.C. § 1504(a); I.R.C. § 243(a)(3). ^ "Holding Companies with Assets Greater Than $10 Billion". National Information Center. June 30, 2014. Retrieved 2014-11-28. ^ Hirsh, Richard. "Emergence of Electrical Utilities in America". Archived from the original on 2012-09-01. ^ "Public vs. Private Power : from FDR to Today". PBS.org. Retrieved 2014-11-28. ^ Cuiffo, Donna-Marie (1993-08-01). "Our Greatest Hits / The Personal Holding Company Trap: Federal Taxation". The CPA Journal. The New York State Society of CPAs. Retrieved 2017-12-06.
Emergence of Electrical Utilities in America at Smithsonian Institution's National Museum of American History
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