QS Study

Types of Holding Company

A holding company is an organization which is formed to acquire the continuing amount of shares or stocks of other companies and thereby to controls their poesies and operations. It is an organization which is formed mainly to acquire the controlling amount of shares or stock of other companies and to controls their policy and operation. The holding companies can be of different types. These are described below:

Parent Holding Company: It means the company when existing company organizes subsidiary companies and holds a controlling amount of shares.

Operating or mixed bolding company: Operating or mixed holding company operates at least one plant and hold shares of subsidiary companies.

Consolidated holding company: When this type of company is formed by consolidating existing companies then it is known as the consolidated holding company.

Primary holding company: This is one which stands at the head of the combined organization with no other organization above them.

Pure holding company: This is one which does not operate any plant but simply holds the controlling amount of share of other operating companies.

Finance Holding Company: This is formed primarily to earn profits by financing the operations of other companies through promotion. This type of company incidentally may exercise control over the finance of the company.

Intermediary holding company: This is one which acts as an agency through which a primary company controls subsidiaries. This company mainly exists for the purpose of controlling subsidiary companies. Thus some view such a company as control this company. And they are of the opinion that this company is platy of rob or an intermediary organization.

From the discussion, we can say that a holding company may be different type as their formation, objectives, and nature. Mainly in developing countries, these types of holding company are seen.