Holding Company and Subsidiary Company: Companies Act, 2013

Holding company

A holding company is a company who has control of different subsidiaries. The primary business of a holding company is that they hold a controlling interest in the securities of different companies. It does not produce any goods and services but it holds shares of other companies to form a separate group  or corporate group. In different parts of the world, in many jurisdictions, holding companies are known as parent companies which hold stock in other companies. It also conducts trade and business activities for themselves. This helps in reducing the risk for the shareholders and ownership can be permitted. 

Holding companies also have interest in assets. They also hold assets of other companies such as intellectual property and trade secrets. This protects the secrets from operation company and there is less risk involved when it comes to litigation. In abroad, there is a tax consolidation where 80% of tax must be owned and tax free dividends can be claimed. If a company X owns stocks of company Y which is 80% or more than that, then company X will not pay any taxes on dividends paid by company Y to its stockholders. This will help to transfer cash within a single enterprise. The main objective of holding stock is that it influences and controls business decisions. The holding company holds membership interests in different companies. 


  • Johnson & Johnson is a holding company and it controls the shares and interest of its different subsidiaries. The different subsidiaries under Johnson & Johnson are Janssen Pharmaceutical, DePuy Synthes, lifescan, Neutrogena, Ethicon and Actelion. 
  • Loblaw is a holding company or parent company. The subsidiaries which it holds are shoppers drug Mart, Joe Fresh, T&T, No Frills and Real Canadian Superstore. 

Subsidiary Company

A subsidiary company is a company that belongs to another company that is the holding company and the parent company in this corporate world. The parent company has control over the subsidiary company and holds almost 80% of the stock or above that. A company is not a subsidiary initially. It becomes a subsidiary when a different company purchases 51% of its stock. At that time the company turns a subsidiary company. Disney corporation has bought the Disney channel with more than 60% shares. So Disney Channel is the subsidiary of Disney corporation. A subsidiary can be of two types. 

  • Wholly owned subsidiary and Partly owned subsidiary. 

If we describe a wholly owned subsidiary, it is a subsidiary whose full shares, that is 100% shares, are owned by the parent company or holding company. 

And partly owned subsidiaries are those subsidiaries whose more than 50% shares and less than 100% shares are owned or controlled by the parent or holding company. 

The purpose of a subsidiary company is that it has a separate legal entity for regulation, tax and liability purposes. In a subsidiary company, there is a person who will play the role of both CEO and president. Incase of small business, the CEO and president owns the company. The stock of the subsidiary is considered to be an asset on the balance sheet of the holding company. The profit distributions  are exempted from the withholding taxes. This can be done vice versa, both from subsidiary to parent company or parent to subsidiary company. 


  • DQ ,Clayton homes, Geico, Shaw Floors, Lubrizol, See’s Candies, The Marmon Group, BNSF Railway, Netjets are the subsidiary companies of the parent company or holding company Berkshire Hathaway.
  • Google, google ventures, you tube, Google map, Google fibre, Google capital, Google calico and Google Adwords are the subsidiary companies of the parent company Alphabet. 

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

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We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

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