A holding company is a company that owns shares in another
company. If the holding company owns the majority of shares of
another company, it is also referred to as a parent company. It
generally does not produce goods or services itself. The sole
purpose of a holding company is usually to own shares in another
company.
The reasons for establishing holding companies are diverse. They
may be created to operate for a short period of time or as part of
a long-term plan. Whether it is better to form a holding company to
hold your shares rather than you holding them personally requires
significant consideration of your individual circumstances and
proper advice from qualified professionals. Factors to consider
include the nature and revenue of the business, the jurisdiction in
which the business owner resides, and the business owner's long
term goals. In this article I have outlined some of the benefits
and drawbacks associated with creating holding companies.
