Question

Difference between holding company and subsidary company in a tabular form

Answer 1

Ownership

A holding company buys, absorbs or otherwise obtains a majority percentage of stock in another company, which becomes known as its subsidiary. Typically, a holding company must control 50 percent or more of a company’s stock before it's considered a subsidiary. Holding companies may also own other holding companies — in this case, they're known as top holding companies. The holding company has all rights and responsibilities of ownership for its subsidiaries. The subsidiaries, while not independently owned, often continue to operate as individual entities, though major corporate decisions are made by the holding company.

Management

A holding company directs the management and operations of the subsidiaries it owns and maintains the authority to add or remove board members, directors and other key management and personnel. A holding company may have strict managerial control or may allow subsidiaries to act with some level of autonomy for day-to-day business operations, including lower- and midlevel hiring and certain budgeting decisions.

Financial Control

A subsidiary has little to no financial control over its operations. Even independently acting subsidiaries are ultimately financially controlled by their holding company. This includes financial activities such as investment decisions, sales projections and budgeting. If a subsidiary was itself a holding company prior to becoming a subsidiary of another holding company, all of its subsidiaries also become subsidiaries of the top holding company.

Legal Responsibility

A holding company may invest in subsidiaries in a variety of industries to diversify its investment, lower its risk potential and, in some instances, take advantage of shared loss and tax consolidation. Although a holding company may enjoy the profits of its subsidiaries, it also has a fiduciary responsibility to the subsidiaries it controls. A subsidiary that regains a majority of its shares also regains its autonomy from its holding company.

 

Answer 2

Holding company:

• In order to be considered a holding company, the mission of your company is to own other entities.
• The holding company holds the stock, bonds or properties of other companies.
• Decision making here is by own

Subsidiary company:

• A subsidiary company completely runs by actual parent company
• Any other type of company may decide to buy into another company. If the parent company owns a subsidiary 100 percent, it is called a wholly – owned subsidiary.
• Decision making is by parent company