The company founders reserve the right to determine the purpose of the company . You can choose freely between production , trading or service companies . Under commercial law , these companies are also allowed to take all measures that promote the operational purpose, in particular acquire stakes in other companies. If the purpose of the business consists exclusively of the acquisition and management of investments, then there is a holding company. There are two types of holding companies. In the case of pure participation holdings , the acquisition of participations serves the focus and direct object of the company. In mixed holdings with an operative business area, the acquisition of a stake is only the main object of the company if it makes up a substantial part of the business.
Historically, the holding company is the oldest form of corporate organization or formation of corporate groups . The importance of this type of company only arose through the development in the USA, but some roots are also in England. The idea of providing a stake in other companies as the sole business purpose of a company originated in the USA. The word "Holding" (from English to hold ) stood there for holding holdings, i.e. property management. From 1870 onwards the trusts came into being in the USA , whose committee of trustees (the English Board of Trustees ) dealt only with the administration of the shares of the companies controlled by it. After the Sherman Antitrust Act came into force in July 1890 and banned all trade-impairing trusts, this law was circumvented by the formation of holding companies . The most famous foundation in October 1889 was the “Standard Oil Company of New Jersey Holding” , the legal successor to the “Standard Oil Trust” that was established in January 1882 - the first known trust in American economic history. The "Securities Holding Company" bought just enough shares to have the critical number of votes to influence.
The first German holding company was the "Nobel Dynamite Trust Company Ltd." founded in London in October 1886 . After 1920 the pace of group formation in Germany increased significantly. However, the restrictive tax legislation prevented the establishment of holdings based in Germany. It was not until the Site Protection Act of September 1993 that attempted to improve the holding's position.
In Switzerland, on the other hand, tax legislation has made a significant contribution to the holding's popularity. The canton of St. Gallen created the first privilege for pure holding companies in 1916 .
The holding company is not regulated by German, Swiss or Austrian company law. It is a company whose main operational purpose is a long-term investment in one or more legally independent companies. It is not tied to any legal form ; the stock corporation and GmbH are preferred.
In AktG , the holding company is described by grouping one or more dependent companies “under the uniform management of the controlling company”. According to the irrefutable assumption, these necessarily form a group . "Uniform management" here means that the holding company, due to its influence under group law, has an effect on the business policy of the holdings and performs at least one of the operational functions of its holdings.(1) sentence 1
Otherwise there are only legal definitions in special laws that describe the holding company for its purposes. (1) No. 1 KAGB provides a legal definition according to which holdings are companies "that hold a stake in one or more other companies, the purpose of which is to pursue a business strategy through their subsidiaries or affiliated companies or holdings, to promote the long-term value of the subsidiaries, affiliates or participations ”. Insurance holding companies are defined in No. 31 VAG and the mixed financial holding company in (10) FKAG .
A characteristic of the corporate contract is the management power, because the holding company, as the controlling company, makes decisions in at least one of the operational functional areas ( procurement , financing , organization , sales ) and enforces them - if necessary against the will of the controlled company. The independent management of the management board of the controlled company ( AktG) is replaced by externally determined management of the dominant company ( (1) AktG). Such corporate contracts lead irrefutably to a so-called contract group between the contracting companies ( (1) sentence 2 AktG) in the form of a subordinate group.
There is a “de facto group” without contractual relationships and only with capital participation. The level of participation is decisive for the degree of influence. A majority stake is required, with the help of which the holding company can pass majority resolutions in its favor at the general meeting or shareholders' meeting of the subsidiary. This is a participation rate of over 50%, with which resolutions for which a simple majority is intended can be brought about or prevented.
While the holding company is referred to as the parent company under corporate law, the company managed by the holding company as a holding is called a subsidiary . The types of holding companies can be differentiated according to function and hierarchy.
Operational holding company or parent company
This is the traditional form of organization of large companies. The parent company in the classic sense develops essential activities necessary for the service creation process itself, that is, it is directly active in the market ( operational in the sense of 'actively acting'). The establishment or acquisition of subsidiaries serves to supplement or support, e.g. B. Foreign branches. The subsidiaries are therefore usually significantly smaller than the parent company and depend on it strategically, structurally and in terms of personnel. The corporate headquarters has a very strong influence on the subsidiaries. The operative holding company can be found primarily in corporations that have outgrown a dominant business area through vertical and horizontal diversification .
Management holding or strategy holding
The management holding company , on the other hand, does not have its own operational business. Unlike the financial holding company, it not only holds the stakes in the subsidiaries, but also manages them. These management tasks typically include the definition of the strategic business areas, the strategic management, the filling of management positions and the management of the flow of capital within the group. It is possible that the board members of the holding company also assume the management functions of the subsidiaries, e.g. B. as CEO. The greatest advantage of this holding company is its flexibility, as each subsidiary develops strategies for its business area. This form of holding combines the market proximity and flexibility of small and medium-sized enterprises (SMEs) with the financial strength and market presence of large companies. Examples of management holdings can be found at automotive and electrical companies.
The strategic holdings also include financial holdings that serve to present the corporate group as a whole, for example in the sense of the umbrella brand : The executive body of the corporate group, the corporate headquarters, is then - hierarchically next to the productive branches - as a subsidiary below the Umbrella brand, in which all common strategic concepts are summarized. This structure is used in all industries in which a group of companies wants to present itself as a company with broad competencies, for example in the construction sector as well as in retail groups.
Financial holding or asset holding
The financial holding is the counterpart of the operational holding. It primarily manages the assets of the entire group and exercises neither operational nor strategic management in its subsidiaries. By filling the top management positions, setting financial targets and allocating financial resources, there is only indirect influence. The focus is on optimizing earnings and value for the group as a whole, or just individual (minority) holdings.
The financial holding can be reduced in its entrepreneurial influence to such an extent that it is only an asset management company without group status. Then one speaks of a holding company , such company structures are often reduced to a registered name and no personnel. Such holdings are used on the one hand in corporate groups of more or less independent companies in order to comply with the increasingly strict group financial statements, i.e. the consolidation of only internal business flows, and on the other hand in order to be able to structure the entire group in a more independent and flexible way both financially and operationally ( Deconsolidation, de-domination agreements). In addition, financial holdings are used to prepare the organizational processing of company acquisitions , or for strategic reasons, for example to get a well-known company name, or to put several established names next to each other after company mergers without having to rename the sub-companies themselves or to establish a new common name. Another sector in which pure financial holdings are located are, for example, privately owned groups of companies, where the holding company is owned by private individuals or private foundations - often without any economic competence - as well as in international corporations, in which the national holding company represents the entirety of the group parts reflected in a state. The latter forms are reduced to a pure representation of a legal person .
Organizational or structural holding
In addition to corporate takeovers and start-ups, holding companies are increasingly being used for internal organization. Then one also speaks of an organizational holding company : For example, a railway company could combine its entire passenger and freight transport agendas (divisional structure) into two holdings in order to maintain an overview of the divisions (division consolidation), or a telecommunications provider could organize data line operations and services ( functional structure) in order to be able to appear under different names. This corporate group structure is independent of whether the divisional or functional umbrella holding itself is operationally active in the sense of a department head, whether it only works strategically in the sense of a supervisory department, or whether it is a pure subsidiary of the parent company. This form can also be used to organize complex corporate structures, or to nest them multiple times: The holding companies are only subsidiaries within the group.
With regard to the hierarchy, the positioning of a holding company in the corporate structure is examined. The umbrella holding is at the top of the group and, as the parent company, holds the investments directly or indirectly through intermediate holding companies . The latter (also sub-holding company called) is located in the Group hierarchy regularly below the holding company and can be used for management tasks, which makes it the management holding company of a subgroup.
The services are provided in the subsidiaries, the basic operational units of the group. With regard to holding companies, it is irrelevant whether these vertical sub-levels operate in the same value-added process and thus have a functional structure , or whether they are active in different value-added processes and thus a structure according to object areas is given ( divisional organization ). Many holding companies try to use synergy effects between the subsidiaries. From this intention, central areas are created with the appropriate functional authority to issue orders to the subsidiaries, which are created according to regional or product-oriented aspects.
The holding company is a common organizational tool for structuring group companies and thus for corporate concentration . In addition to this main purpose, the management of a group, the holding also fulfills various other purposes. It can be used to provide tax advantages , especially in the case of foreign contacts . With their help, capital participation limits can be circumvented and advantages of size and specialization can be used in the context of capital investments . In addition, this form of organization enables the easy integration of acquired companies. It can enter into guarantees such as letters of comfort on behalf of its subsidiaries so that they can obtain bank loans. The most flexible type is the financial holding company, the rigidest form the parent company group. In economic terms , holdings are characterized by financial assets that dominate the assets of the holding company's balance sheet . As a result, it typically has a high investment intensity and a low capital turnover rate . The income statement is dominated by income / losses from profit transfer agreements and participations.
Tax advantages can be used by the holding company relocating its headquarters to a country in which there are more attractive tax conditions. The profits transferred by the subsidiaries to the holding company are then subject to U. more favorable tax legislation .
For anti-trust reasons, companies are often prohibited from holding large equity stakes in other companies. In many cases, exceeding a minimum participation is also associated with legal obligations. To get around this, holding companies are often established.
Holding companies enable the companies concerned to convert direct to indirect equity investments. For the legislature and the supervisory authorities, it is through the interposition of intermediate holding u. It may be more difficult to detect and prohibit indirect equity investments. However, in many countries these days, investments must be disclosed. The notification obligations also apply to foreign companies insofar as they are involved in German companies.
The disadvantages of a holding are the general dependency, anonymization and the similarity as with the business unit organization . The structuring in subsidiaries can result in a lack of transparency in relation to the goals of the entire group. Their legal independence also results in a significantly higher administrative effort.
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- Thomas Keller, Management with Holding Concepts , 1993, p. 38.
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- as far as they z. B. recognized by the German foreign tax law.
- In Germany based on AktG and WpHG