What is a holding company?
A holding company is a company that owns other companies’ outstanding stock. It usually refers to a company which does not produce goods or services itself, rather its only purpose is owning shares of other companies. 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 U.S., 80% or more of voting stock must be owned before tax consolidation benefits such as tax-free dividends can be claimed Sometimes a company intended to be a pure holding company identifies itself as such by adding “Holdings” or “(Holdings)” to its name, as in Sears Holdings.
