What's the difference between a parent company and a holding company?

Category: Business/Financial Management

Analysis:

1, parent company

A company that owns shares in other companies, thereby controlling its business activities and making it its own subsidiary. (mainly through the arrangement of controlling rights, non-equity rights, sales channels and production funds). The parent company is a legal person registered in China.

Historically, the form of the parent company is related to the development of the holding company.

The parent company can be divided into "pure holding company" and "mixed holding company":

If the parent company only holds equity or other securities, and no longer engages in other business activities or participates in the management of other companies under its control, the parent company is called a "pure holding company". According to the laws of some countries, pure holding companies are not allowed to engage in industrial and commercial activities, nor are they allowed to directly participate in public transactions. They are not allowed to own additional real estate except their own office buildings.

Many parent companies are not only engaged in equity participation and holding activities, but also engaged in industry and commerce, so they are called "mixed holding companies or holding-operating companies". Mixed holding mode is popular not only in manufacturing industry, but also in financial industry.

Generally speaking, the parent company in transnational operation is not a pure holding company, but it can be regarded as a mixed holding company. The parent company's participation in the management of subsidiaries mainly refers to the participation in policies and strategies, rather than daily operations.