Question

Distinguish between holding company and subsidary company

Answer 1

Answer:

A holding company is a parent company designed to own or control other businesses. A subsidiary is owned or controlled by a parent company, but that parent company might not be a holding company

Explanation:

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Answer 2

Explanation:

Essentially, if one company holds more than 50% of the shares of another or appoints a majority of the other company’s directors, the second company is a subsidiary of the first. The first company is called the holding company.

If the holding company owns 100% of the shares of the subsidiary, the subsidiary is known as a wholly owned subsidiary (WOS).

A private company requires a minimum of two shareholders, so 100% shareholding is technically impossible. The company may give one share to another shareholder (who is friendly or aligned to the holding company). Typically, it is a relative of the promoters who run the company.