holdingbolag

A holdingbolag, or holding company, is a company whose primary purpose is to own the outstanding shares of other companies. It usually does not engage in the day-to-day operations of the businesses it owns.

Holding companies are used to centralize ownership, simplify control over multiple subsidiaries, and facilitate capital allocation, mergers and acquisitions, and succession planning. They can also serve as vehicles for strategic investments and risk management by separating assets from operating risks.

There are different forms. A pure holding company mainly holds shares and has limited operating activities. A mixed or operational holding company also conducts some business activities. In a corporate group, the holding company sits at the top of a hierarchy with subsidiaries beneath it.

Tax and financing considerations vary by jurisdiction. In many countries, dividends and capital gains between a holding company and its subsidiaries may enjoy favorable tax treatment to avoid double taxation. The holding company may also issue financing to subsidiaries or regroup profits through internal loans or allocations.

Risks and governance issues include compliance with corporate and tax rules, transfer pricing, and the costs of administration. Setting up a holding structure can add complexity and may not be advantageous for all situations. Professional advice is often needed to optimize the structure for a given legal framework.