Understanding Company, Holding Company, and Subsidiary Company is very important when analyzing investments, financial statements, and even commercial papers. Let’s break it down simply and professionally.
1. A Company
A Company is simply a legal business entity created to carry out business activities.
It can:
Make profits
Own assets
Borrow money
Be sued or sue
Issue shares
Example
Dangote Cement Plc is a company because:
It produces cement
It earns revenue
It has shareholders
It publishes financial statements
So, any registered business entity is a company.
2. A Holding Company
A Holding Company is a company that does not mainly produce goods or services but owns shares in other companies.
Its main purpose is:
Control other companies
Own investments
Manage subsidiaries
Example
Dangote Industries Limited is a Holding Company because it owns:
Dangote Cement Plc
Dangote Sugar Refinery Plc
NASCON Allied Industries Plc
Dangote Industries controls these companies.
So:
Holding company = Parent company
3. A Subsidiary Company
A Subsidiary Company is a company that is **owned