Meaning of Holding company - Holding Companies, Advanced Corporate Accounting B Com Notes | EduRev

Advanced Corporate Accounting

B Com : Meaning of Holding company - Holding Companies, Advanced Corporate Accounting B Com Notes | EduRev

The document Meaning of Holding company - Holding Companies, Advanced Corporate Accounting B Com Notes | EduRev is a part of the B Com Course Advanced Corporate Accounting.
All you need of B Com at this link: B Com

Holding Companies​

A holding company is the company that holds either the whole of the share capital or a majority of the shares in one or more companies so as to have a controlling interest in such companies. Such other companies are known as subsidiary companies. Unlike in amalgamation or absorption, the subsidiary companies retain their identities because they do businesses in their own names

Group of Companies​

A Holding company together with its Subsidiaries can be called as the Group of companies.

Need for Group of Companies

The following are the advantages for a company to operate as a group:

1. Decentralisation of financial risk: If one entity fails, it does not affect the other companies in the group. The other companies can continue even if one or two companies in the group fail.
2. Lawful obligation: In some cases, the formation of a subsidiary company is a legal requirement.
3. Diversification possible at lower cost: One company acquires controlling interest of another company. It helps the company to diversify its business activities at least cost.

Legal Definition

Subsidiary Company– Sec 2(87) of the Companies Act 2013 defines a company. As per this section,a company shall be deemed to be a subsidiary company of another if and only if:
(a) that other company controls the composition of its board of directors ; or
(b) when the first mentioned company is another company, holds more than half in nominal value of its equity share capital; or
(c) the company is a subsidiary of any company which is that other company’s subsidiary.

A Subsidiary company may be either Wholly Owned Subsidiary or Partly Owned Subsidiary.

Offer running on EduRev: Apply code STAYHOME200 to get INR 200 off on our premium plan EduRev Infinity!

Related Searches

Summary

,

Meaning of Holding company - Holding Companies

,

Meaning of Holding company - Holding Companies

,

Previous Year Questions with Solutions

,

Important questions

,

practice quizzes

,

Advanced Corporate Accounting B Com Notes | EduRev

,

Advanced Corporate Accounting B Com Notes | EduRev

,

mock tests for examination

,

Sample Paper

,

ppt

,

Exam

,

Extra Questions

,

Meaning of Holding company - Holding Companies

,

Free

,

Viva Questions

,

pdf

,

past year papers

,

MCQs

,

Advanced Corporate Accounting B Com Notes | EduRev

,

Semester Notes

,

Objective type Questions

,

shortcuts and tricks

,

video lectures

,

study material

;