Holding Company

In a corporate group context, a holding company is the parent entity under which a series of group subsidiaries and/or business units are legally controlled. The holding company typically does not have an operational purpose per se other than to own/control and manage operating or production subsidiaries. Holding companies have their own staff and management and operate independently of subsidiaries, with power to appoint executive management at subsidiary level. Depending on the rules pertaining in legal jurisdictions, holding companies can control borrowing and the flow of funds through the corporation; operating subsidiaries may have independent funding powers. In the latter example, creditors may have limited recourse to the holding company’s other assets.