What is a holding?
Holding is the main company that ownscontrolling stakes in all subsidiaries united in a single structure. The main company controls the activities of all organizations included in its composition. Very often, such enterprises are independent of each other and have different fields of activity. For more than half a century, such forms of holdings as circular and cross have developed strongly.
Круговой холдинг - это такая система, когда a subordinate company can become at the same time a co-owner of the capital of the main company if it acquires shares of a higher founder. As a result, the subsidiary may, to some extent, control the activities of the parent company.
What is a cross holding?This is a form of capital participation, when the parent company of one structure may become the owner-partner of shares in subsidiaries that are part of the holding structures of other parent companies.
These two types of holdings are more suitable for such commercial structures that are difficult to regulate on the part of state bodies.
The founders of the holding can be both individuals and legal entities.
Organization properties
To better understand what a holding is, considerits distinctive features. These include the aggregate stocks of firms from various industries and sectors of the economy, which are dispersed in many regions. If you draw a pyramid, you can imagine that at the top there are one or two companies, from which subsidiaries, granddaughters and other related companies go down. This is what the staging of such an organization as a holding looks like. The definition of a holding indicates that its management is usually centralized. It is almost always in the hands of the parent company.
The holding structure is an associationcompanies whose capital is owned by the parent company. What is a holding in terms of the relationship between the subsidiary and the parent company? Subsidiaries are legal entities and are completely independent, while the parent company makes a profit from deposits in their capital, and is not responsible for their obligations.
Ways to unite
Enterprises can be combined into holding companies in six ways:
The first method is called horizontalintegration - the accession of enterprises that are united by a common activity. This is done to conquer new market segments, to increase the power of one company with the help of the strengths of another.
The second way is vertical integration - organizations are united in one technological cycle, mainly to reduce the total cost of production.
The third way is the creation of new companies and their subsequent joining to the created holding.
The fourth way is the creation of a new management company on the shares of two different organizations and its subsequent development, already without these organizations.
The fifth option is essentially the same as the previous one, only national and transnational corporations are united.
And the last, but not less popular and popular way, is the division of large companies after their restructuring.
