What is a holding company business?

What is a holding company business?

Holding Company is a company whose income is mainly from holding shares in other companies. Able to invest both domestically and internationally The investment company must not be related to the business of investment management (Investment Company), in which the holding company must hold shares in at least 1 core company with the following conditions:

- The holding company must own more than 50% of the shares in the parent company.

- If the principal company has ties with the government with legal restrictions, the holding company must hold shares in that company for more than 40%.

Advantages of Holding Company

- Reduce the cost of financing

Holding companies with high financial liquidity tend to get loans at lower interest rates than subsidiaries, so they can find sources of loans for subsidiaries.

- Liability Protection for Liabilities

Holding's Operations and Assets The company will be separated. Make a shield to protect the liability part. because the creditors of the subsidiaries cannot access the assets either way

- reduce the risk

The holding company will have several subsidiaries and business operations that are clearly separated from each other. This makes the risk lower than other business operations.

- No need to manage the company by yourself

The holding company can invest in a variety of unrelated industries. Therefore, there is no need to manage everything by yourself. Because the subsidiary will already have an executive to manage it.

Disadvantages of Holding Company

- various complexity

will be structurally complex. management If not dealt with effectively, it can cause long-term damage.

- conflict

There may be conflicts of disagreement with executives in various subsidiaries.

- Establishment and cost

Setting up and registering a holding company and its subsidiaries are complicated details. Especially the matter of paying taxes that are duplicate.

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