Pure holding companies do not directly engage in production and operation business, but only carry out capital operation by holding shares of other companies. In addition to capital operation through holding, hybrid holding companies also engage in some production and business operations.
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. So it is also called 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; All or part of the assets are owned by the parent company, but companies that are economically and legally independent of the parent company are called subsidiaries. With the extension of controlling rights, Sun Company came into being.
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It not only controls other companies by buying stocks, but also engages in some commercial operations. The Bank Holding Company Law of the United States 1970 stipulates the holding company of the American banking industry, and any company that controls more than 25% of the shares of a bank is a holding company. After World War II, the holding companies of American banks have been widely developed.
The number of holding companies is increasing and their strength is also increasing. Many big banks in America have their own holding companies.
For example, the holding company of Chicago First National Bank is called Chicago First Company. The "Western Bank Company" in Los Angeles is also a well-known bank holding company. As early as 1974, it ranked 27th among the world's largest banks.
It has assets of183 billion US dollars, and controls most of the shares of more than 20 banks in the western United States 1 1 states. These bank holding companies do not operate banking business themselves, but only aim at controlling bank shares.