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Holding companies reduce risk for the shareholders, and can permit the ownership and control of a number of different companies. The New York Times uses the term parent holding company. [2] Holding companies can be subsidiaries in a tiered structure.
A subsidiary, subsidiary company, or daughter company [1] [2] [3] is a company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidiary company.
holding company; subsidiary company; sole proprietorship; charitable incorporated organisation (UK) reciprocal inter-insurance exchange; However, the regulations governing particular types of entities, even those described as roughly equivalent, differ from jurisdiction to jurisdiction.
The holding company oversees its subsidiaries without offering products or services of its own. A bank holding company, in particular, has a controlling interest in one or more banks.
A corporate group is composed of companies. The general rule is that a company is a separate legal entity from its shareholders, that is the shareholder's liability for the subsidiary's debts is limited to the value of the shares, [4] and the shareholders cannot be required to perform the company's obligations.
A conglomerate usually has a parent company that owns and controls many subsidiaries, which are legally independent but financially and strategically dependent on the parent company. Conglomerates are often large and multinational corporations that have a global presence and a diversified portfolio of products and services.
In the United States, a bank holding company, as provided by the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), is broadly defined as "any company that has control over a bank". [2] All bank holding companies in the US are required to register with the Board of Governors of the Federal Reserve System .
If one company owns a majority in another company, then the first company is deemed to exert a controlling influence. [1] The parent company is then liable for any damage which results from the interference of the parent company in the subsidiary, which is judged on a case-by-case basis. [ 4 ]