A holding company is an organization that is shaped with the essential target of purchasing and controlling different elements. They can do the same by holding the company’s sufficient voting power or shares. These companies can also operate other business lines. The companies which are controlled by them are known as subsidiary companies. There is no limit fixed on the number of subsidiary companies held by a holding company. For holding and controlling other entities, it has to hold 50% or more of the shares or voting power of that company. This will allow it to make management decisions and control that business.
A holding company can also be referred to as a parent company. Holding companies enjoy many benefits. These companies can easily arrange finance, so they are easier to operate long-term projects with less risk. There are various productive holding associations from one side of the planet to the next. We from Odint Consulting provide you this article with some popular holding company examples from all over the world within different industries.
Some Popular Holding Company Examples
Alphabet Inc.
It is amongst the most well-known holding organizations. In the year 2015, Google attempted reproduction and revamped as an auxiliary of Alphabet Inc. This new parent company holds Google and many other companies as their subsidiaries.
It is a worldwide aggregate that has its headquarters in California. It doesn’t work on any of its concerning exercises. Through its auxiliaries, it claims and holds a significant number of scholarly properties. This organization is run by the profit, income, and resources of its auxiliaries. It has its primary business as advertisement, and it has generated 85% of its revenue from this only in financial years 2018.
This company is formed to narrow the business scope of Google. For this, it is focused on the core business of Google and creating better management by running its subsidiaries separately. At the hour of rebuilding Google, every one of its auxiliaries was moved to Alphabet Inc.
Stocks of this organization are kept on being exchanged the same way. Some other subsidiaries formed by Alphabet Inc. include Calico, CapitalG, Chronicle, Google ventures, Google fibers, DeepMind technologies, Makani, Verily, Loon, Waymo, Sidewalk Labs, and many more.
JPMorgan
This company is well known in the field of investment banking and financial servicing. It is considered as one of the largest players of the global investment bank and financial service. The company got set up by the consolidation of JPMorgan and Chase Manhattan Bank, which is a worldwide public organization and had its base camp in New York, USA—officially born in 2000.
The common stocks of JPMorgan and Chase and co. It is listed on the NYSE with the symbol of JPM. Currently, the chairman and CEO of this company are Jamie Dimon.
In the area of resources and abundance of the executives, corporate and speculation banking, shopper and local area banking, business banking, it possesses control over more than 40 auxiliaries. JPMorgan Chase Bank, asset management, etc., are amongst the most significant subsidiaries.
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Sony
It is one of the famous holding corporations. It is a multinational conglomerate that has its headquarters in Tokyo, Japan. Sony is a popular brand name and well-known company for its electronics, music, PlayStation, and other services. This company was set up back in the year 1946. Sony Corporation’s organizers were Masaru Ibuka and Akio Morita. It’s now a private business.
It has its common stocks listed on the Tokyo Stocks Exchange and New York Stocks Exchange with the symbol of SNE. This company has reported firm-wide revenue of 8665.7 billion JPY and also has a net income of approximately 419 billion JPY.
Sony partnership works its wide scope of business exercises like diversion, gadgets, gaming, broadcast communications, and so on. Famous subsidiaries include Sony Music Entertainment, Sony Electronics., etc.
Some of these industries also hold and control subsequent interests in other companies. For example, Sony interactive entertainment Inc. has its subsidiary Gaikai which is an American gaming technology provider.
J&J
It was formed in 1887. It is a global holding organization that has its central command in New Jersey, USA. This company is well known for households and is a popular brand name in this field all over the world. Its main products are related to baby care and first aid.
This company is involved in many works such as research and development, medical devices, pharmaceuticals products, health-related products, and other related products. It’s a public firm that has listed normal stocks on the New York Stock Exchange.
This company has reported consolidated revenues of $81.5 billion with net profits of $15 billion. According to the report of 2018, this company has over 260 operating subsidiaries worldwide. These subsidiaries own their patents related to their products and formulas.
The major subsidiaries of Johnson & Johnson have included Cordi’s corporations, Ethicon Inc., McNeil consumer health, Neutrogena, Johnson pharmaceutical services, and many more.
Berkshire Hathaway
Another one of the many international holding companies having roots in multiple countries and territories. It was founded in 1839 and has its headquarters in Kiewit Plaza, Omaha Nebraska, the United States, by Oliver Chace. It is a conglomerate that is run by the investor, chairman, and CEO of Warren Buffett. Initially, this company was a textiles company. The stocks of this company are the most expensive in the market.
The company was discovered when a combination of two companies, namely Cotton Manufacturing Organization of Berkshire and Massachusetts Firms Hathaway Manufacturing Organization. The commencement of the final incorporation happened in 1995. The company itself is from Omaha, Nebraska.
In 1965, it was taken over by Buffett’s investment group and quickly started to follow Buffett’s policies of taking undervalued stocks or companies. Buffett is responsible for its growth as it transformed it from a struggling textiles manufacturing company to one of the biggest holding companies whose stocks are the most expensive in the market.
Berkshire Hathaway has holdings in dozens of big companies, whether public or private. According to the report of 2020, it holds more than 80 subsidiaries worldwide. Some major holdings of Berkshire Hathaway include Apple, Bank of America, Coca-Cola, Delta Air Lines, American Express, Duracell, GEICO, MedPro group, Clayton homes, home services of America, and many more
Reliance Industries
This company comes under the esteemed lists of the largest organizations that originate from India. It is said to be the biggest private company in the country. The company itself took shape in 1973.
The operational base of the company is situated in Mumbai, India. Initially, it was the textiles and polyester company. But nowadays, it is engaged in many types of other businesses such as energy petrochemicals, telecommunications, natural resources, retailing, and textiles.
This company produces and provides services that are almost related to the daily needs of individuals. This company is growing with the leadership of Mukesh Ambani. It is the conglomerate holding company and the highest taxpayer company of Indian private sector companies.
This company was incorporated by the late Dhirubhai Ambani, who is the father of Mukesh Ambani and Anil Ambani. Post his demise; Reliance was distributed between Anil and Mukesh in all its entirety. This company has taken over many successful projects and also engaged in the discovery of gas at the Krishna Godavari Basin.
It has 374 subsidiaries and 150 associate companies, according to the data of 2021. Crucial subsidiaries of this company comprise Reliance Capital, Reliance Power, Reliance Defense, Jio, etc.
Conclusion
Several companies operate under a massive company; that company is known as a Holding Company. It holds and controls them. These companies are known as subsidiary companies. Conglomerate holding companies are a common holding company examples. Simply, this means a wide range of products and services are provided under one head.
As we can see in the above holding company examples, consolidated financial statements of the holding companies are to be filed. This shows the whole performance of all the subsidiaries and also that of the parent company.
Furthermore, subsidiary companies can also hold interest in other companies, which means a subsidiary company can also be the parent company for another company.
FAQ’s
The main objective of such a company is to look over the management of other organizations no matter if they are a company, a limited liability company, or a partnership. A company is also eligible to hold tangible properties like immovable objects, trademarks, patents—securities, etc.
A PHC or a personal holding company is a C kind of corporation. In this corporation, about more than 50% of the outstanding stocks are owned (either indirectly or directly) by five or fewer individuals and get around 60% of the ordinary gross income that is adjusted from passive sources. A personal holding company is liable to pay tax amounting to 20%.
Even though not doing any operations, a holding company still has a CEO, along with a directors’ board. These officials assist in making decisions for managing companies and current investments and are viable to invest in other firms or not.
Holding companies generate revenue through various means from their subsidiaries. Furthermore, some of them may bill their subsidiaries for operational expenses in return for providing back-office services such as accounting or IT.
