Holding company

For the band, see Big Brother and the Holding Company. quirements, and has led to mergers and holding company
formation among power marketing and power brokering
companies.[4]
A holding company is a company that owns other companies outstanding stock. The term usually refers to a
company that does not produce goods or services itself;
1.3 Broadcasting
rather, its purpose is to own shares of other companies
to form a corporate group. Holding companies allow the
Further information: Media conglomerate
reduction of risk for the owners and can allow the ownership and control of a number of dierent companies.
In US broadcasting, many major media conglomerates
In the United States, 80% or more of stock, in voting and
have purchased smaller broadcasters outright, but have
value, must be owned before tax consolidation benets
not changed the broadcast licenses to reect this, result[1]
such as tax-free dividends can be claimed. That is, if
ing in stations that are (for example) still licensed to Jacor
Company A owns 80% or more of the stock of Company
and Citicasters, eectively making them such as subB, Company A will not pay taxes on dividends paid by
sidiary companies of their owner iHeartMedia. This is
Company B to its stockholders, as the payment of divisometimes done on a per-market basis. For example, in
dends from B to A is essentially Company A transferring
Atlanta both WNNX and later WWWQ are licensed to
cash from one company to the other. Any other shareWNNX LiCo, Inc. (LiCo meaning license company),
holders of Company B will pay the usual taxes on divboth owned by Susquehanna Radio (which was later sold
idends, as they are legitimate and ordinary dividends to
to Cumulus Media). In determining caps to prevent exthese shareholders.
cessive concentration of media ownership, all of these are
Sometimes a company intended to be a pure holding attributed to the parent company, as are leased stations,
company identies itself as such by adding Holding or as a matter of broadcast regulation.
Holdings to its name.

1.4 Personal holding company

1
1.1

United States

In the United States, a personal holding company is dened in section 542 of the Internal Revenue Code. A
corporation is a personal holding company if both of the
following requirements are met:

Banking

Further information: bank holding company

Gross income test: At least 60% of the corporations

adjusted ordinary gross income is from dividends,
interest, rent, and royalties.

After the nancial crisis of 200708, many U.S. investment banks converted to holding companies. According
to the Federal Financial Institutions Examination Councils (FFIEC) website, JPMorgan Chase & Co., Bank of
America Corp., Citigroup Inc., Wells Fargo & Co., and
Goldman Sachs Groups, Inc. were the ve largest bank
holding companies in the nance sector, as of 31 December 2013, based on total assets.[2]

Stock ownership test: More than 50% in value of

the corporations outstanding stock is owned by ve
or fewer individuals.

2 Parent company
1.2

Utilities

Main article: Parent company

The Public Utility Holding Company Act of 1935 in the

United States caused many energy companies to divest
their subsidiary businesses. Between 1938 and 1958 the
number of holding companies declined from 216 to 18.[3]
An energy law passed in 2005 removed the 1935 re-

A parent company is a company that owns enough voting

stock in another rm (subsidiary) to control management
and operations by inuencing or electing its board of directors. A parent company could simply be a company
1

that wholly owns another company. This would be known

as a wholly owned subsidiary.
When an existing company establishes a new company
and keeps majority shares with itself, and invites other
companies to buy minority shares, it is called a parent
company.

See also
Berkshire Hathaway
Conglomerate
Conglomerate discount
Investment company
List of holding companies
Patent holding company

References

[1] I.R.C. 1504(a); I.R.C. 243(a)(3).

[2] Holding Companies with Assets Greater Than $10 Billion. National Information Center. June 30, 2014. Retrieved 2014-11-28.
[3] Hirsh, Richard. Emergence of Electrical Utilities in
America.
[4] Public vs. Private Power : from FDR to Today. PBS.org.
Retrieved 2014-11-28.

External links
Emergence of Electrical Utilities in America at
Smithsonian Institutions National Museum of
American History
UK Holding Companies at ukincorporation.co.uk
Incorporate a holding company in Hong Kong at ukincorporation.co.uk

EXTERNAL LINKS

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