Question 2: What does holding company mean?
Holding company refers to a company that controls a company by holding a certain number of shares. Holding companies are divided into pure holding companies and mixed holding companies according to their holding methods. Pure holding companies do not directly engage in production and operation business, but only carry out capital operation by holding shares of other companies. Hybrid holding companies not only carry out capital operation through holding, but also engage in some production and operation businesses.
Holding companies have not only financial control but also operational control over subsidiaries, and have the right to decide the appointment of important personnel and the determination of major policies, and even directly send people to operate and manage them. Also known as parent-subsidiary system.
A company that owns shares of other companies and can actually control its business activities is called a parent company, sometimes called a head office; A company whose assets are wholly or partially owned by the parent company, but which is economically and legally opposite to the parent company, is called a subsidiary. With the extension of controlling rights, Sun Company came into being.
Holding is a form in which a company buys shares in which another company has a controlling interest. At the same time, many companies are economically integrated through activities such as appointing managers and business contacts. However, the parent company and subsidiaries are still legal persons and conduct accounting. The parent company does not bear the debts and losses of its subsidiaries.
Characteristics and advantages of holding companies
As an organizational form of modern enterprises, holding company has the characteristics of corporate system and is different from other corporate forms. Its characteristics and advantages are as follows:
1, the economic scale is considerable.
Holding company is different from ordinary company, which is the aggregate of enterprises and the result of the development of ordinary company to a considerable scale. Because a company wants to form a holding relationship with other companies, it must have considerable strength. After the holding company is established, it will inevitably form a stronger economic entity than a single company. Therefore, the famous big companies in the world are basically holding companies, and some excellent companies in China are also developing in the direction of holding management.
2. Enterprises are closely linked by assets.
Holding company is a kind of property right management organization commonly used abroad. It is different from ordinary enterprises directly engaged in commodity production, and it is not a simple product cooperation relationship or a cooperative relationship between enterprises. Instead, it mainly engages in the property management and operation of the company on the basis of equity relationship in the form of holding, equity participation or mutual shareholding, and promotes the commodity management of the group. In fact, these holding companies have formed enterprise groups linked by asset relations.
Holding company system is a very convenient and effective way to concentrate enterprises, that is, to form enterprise groups. Based on the ownership certificate-shares, the holding company not only enjoys the dividends of other companies, but also exerts influence on the decision-making of other companies according to the proportion of the majority shares it owns and exercises shareholders' rights.
3. The controlled company has legal personality.
Another important feature of the holding company is that the parent company and the holding subsidiary have legal personality in form, and the director system is adopted based on the combination of capital. This is a major difference between the holding company and the business department system. Although the division system is a highly decentralized system adopted by large companies, each division generally cannot have its own personality. Holding companies are all legal persons, forming companies within the company, and each subsidiary is a completely decentralized unit of profit management, with a new management organization, which is solely responsible for profits and has the ability to raise funds.
4. The holding company is a whole.
Although the parent company and subsidiaries of a holding company are legal entities, they can bear their own civil liabilities and enjoy civil rights, in fact, because the parent company has a controlling stake in the subsidiary, the major decisions of the subsidiary are basically decided by the parent company that controls the board of directors of the subsidiary, so the behavior of the subsidiary will inevitably reflect the will of the parent company, and the behavior of the subsidiary is regulated by the subsidiary. In this way, in fact, the holding company must form a whole with its own overall interests. Therefore, large holding companies all over the world have formulated unified development strategies to varying degrees and participated in economic competition with overall advantages.
5. Implement diversified management.
The holding company has strong financial resources. In order to accelerate asset appreciation and reduce market risks, they generally adopt diversified business strategies, enter all fields of market economy, and pay attention to the serialization and diversification of products, so they have strong competitive development capabilities.
6. Have considerable financing ability.
The parent company of a holding company must have considerable ability to raise funds and control internal funds in order to form unified and centralized financial resources and credit, and have the ability to adjust internal structure, support the development of key products and key enterprises, and accelerate the development of the company through reinvestment and rolling operation of funds.
Holding company, a unique organizational form, also has a lot of funds needed to save collectivization; The enterprise portfolio relationship is easy to establish (just buy shares and unilaterally establish the portfolio relationship); The mutual personality of legal persons is conducive to spreading risks; Obtain economies of scale for enterprise development; Improve the visibility and vitality of the parent company and the benefits of law and tax. Because holding company has the above characteristics and advantages, it has become an important organizational form and trend for the development of big companies in the world.