The main feature of a holding company is to widely absorb social idle capital to buy shares of other companies by issuing and selling its own shares and bonds, and then further issue more shares and acquire more shares of other companies based on the shares held by these companies.
Holding company is an important tool for financial oligarchs to consolidate and expand their own economic strength. It appeared in the United States at the beginning of the 20th century, and then it was widely developed in other capitalist countries.
There are two types of holding companies:
The first is a pure joint-stock company. That is, it only controls and manipulates other companies by holding a certain number of shares in other companies, and it does not run actual business itself.
The second is a mixed holding company. That is, while holding shares as its business, it also operates commodity production and sales business. The holding company controls other companies by holding the equity of a major joint-stock company as the parent company, then controlling the subsidiaries through the parent company in the same way, and then controlling more companies in turn, forming pyramid control. Because the shares of a joint-stock company are scattered, it is usually only necessary to control 30% ~ 40% of the shares to control the joint-stock company and manipulate its business. Monopoly capital groups can manipulate much more capital than their own capital through this control method of holding shares.