Establishing and licensing companies operating in the field of securities and subject to the provisions of the Capital Market Law No. 95 of 1992 whose main purpose includes participating in the establishment of companies that issue securities or in increasing their capital (holding(

 holding companies

A holding company is a company or organization that owns the traded shares of other companies. The term often refers primarily to a company that does not produce goods or services by itself, but is only intended to own the shares of other companies. The holding company usually owns a majority of the shares in the subsidiary.

According to the British Encyclopedia, a holding company can be defined as a company that owns enough shares to vote in one or more other companies for the purpose of controlling those companies. A distinction can be made between two types of holding companies: a company that exists solely for this purpose and is called a pure (pure) holding company, and a company that engages in business (on its own) is called an operational holding company. The holding company usually owns a majority of the shares in the subsidiary, but sometimes a small share of the ownership of the shares may be enough to give control to the holding company (if the ownership of the remaining shares is widespread).

Comparative commercial laws differed regarding the definition of this company, but the main element of the definition, which is undisputed, is that the main purpose of this company is to participate in the capital of one or several other companies for the purpose of controlling them. These companies controlled by the holding company are called “subsidiaries.” . Some laws require that the purpose of the holding company be limited to the sole purpose of contributing In the capital of other companies for the purpose of controlling them and managing the portfolio of securities it owns in subsidiaries, and it does not allow it to engage in any other economic activity. Other laws allow the holding company to engage in other business besides the main purpose of participating in other companies. Some commercial law jurists see that the holding company is a legal phenomenon of economic concentration between projects, as it is one of the means of gathering companies, so that it is in fact a legal framework for concentration on the basis of supervision in management and participation in the capital.

The holding company's control over others

The control of the holding company over the subsidiaries is achieved through controlling the decision-making authority in the subsidiaries by enjoying the majority of voting in the general assemblies of shareholders or partners and the boards of directors of those companies. The laws stipulate that the holding company must own at least 51 percent in the capital of the subsidiary company, and some laws permit that the holding company’s control over the subsidiary company is achieved by agreement with the rest of the shareholders, according to which it has control over the management, whatever the percentage of shares owned by the holding company in the capital of the subsidiary.

A holding company in one country may control subsidiaries in other countries, and a national company in one country may be subject to the control of a foreign holding company by contributing to the capital of the national company by the foreign holding company.

The holding company is not considered a new legal form added to the forms of companies with independent legal personality known in the commercial law, which is a joint stock company, a partnership limited by shares, a limited liability company, a simple partnership company and a partnership company, but it is permissible - as a general rule, to take one of the previous forms Unless the law specifies a specific form of the holding company, and some laws require that the holding company take the form of a joint stock company, other types of companies such as partnership companies and limited liability companies may not be a holding company.

The difference between the concepts of the parent company and the holding company

A holding company is a company that contains other companies called subsidiaries. The company must submit consolidated financial statements to investors and the Securities and Exchange Commission. The task of its directors and members of the board of directors in general is to maintain control over the subsidiaries. In the United States, a holding company must own more than 80 percent of the voting rights of the shareholders in order to receive any tax benefits.

The parent company by definition is roughly the same as the holding company. Parent companies usually own their subsidiaries either through mergers or acquisitions and acquisitions. This is with the aim of reducing competition, expanding its operations, increasing its operating net income, obtaining greater tax advantages, increasing sources of financing, or even reducing expenses associated with the production of certain goods.

The main difference between the two concepts

In general, there are no fundamental differences between the parent company and the holding company, but the legal implications for the company's status in general differ. It can be said that the holding company is inactive (in the operational sense) except for the purpose of owning other companies. While the parent company usually owns its own commercial projects in addition to its influence and ownership of its subsidiaries for investment purposes or to support and expand its operations.