15 Biggest Holding Companies in the World

Ramish Cheema
11 min read

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In this piece, we will take a look at the 15 biggest holding companies in the world. For more companies,  head on over to 5 Biggest Holding Companies in the World.

A holding company is quite common in the business world, especially when it comes to large firms operating in lucrative industries such as finance. They are created due to the fact that holding companies and their subsidiaries are separate entities. So if the subsidiary encounters any problems, or goes bankrupt for instance, the parent will be shielded from the subsequent liability requirements.

In the financial world, there are different kinds of firms that are involved in the business of investing in other companies. Apart from holding companies, hedge funds and mutual funds also acquire an interest in firms. However, the primary difference between these and a holding company is that the former two do not acquire a controlling stake that provides them with the ability to set management and decide on the long term strategic objectives of the target firm. However, a holding company generally does acquire a controlling stake, and due to this, it is also entitled to the profits of a subsidiary. The percentage of the share in profits depends on the controlling stake and is listed after the subsidiary has accounted for all business expenses, cost of goods sold, interest, and tax payments.

Holding companies also offer tax advantages, if the parent company is headquartered in a low tax rate region. Additionally, the subsidiaries can either be acquired through purchasing shares or if a larger entity decides to spin off a business unit.

There are some limitations to a holding company though. For instance, a holding company cannot acquire a stake in either an S Corp or a sole proprietorship. S companies are exempt from paying taxes, and instead, their profits are routed back to the owners who then pay income taxes. Additionally, while the picture might be rosy for the parent, it comes with a myriad of risks for the subsidiary. The subsidiary cannot raise capital by issuing new shares, and it is also at risk if the parent runs into legal troubles. Finally, multinationals often face difficulties in transferring their profits across countries due to a lack of standardized tax rules that leads to double taxation on the profits depending on the route that the profits take from the subsidiaries to the parent.

With these details in mind, it is time to take a look at some of the biggest holding companies in the world. Most of these are banks, but there are others as well. Renowned names include JPMorgan Chase & Co. (NYSE:JPM), Johnson & Johnson (NYSE:JNJ), and Berkshire Hathaway Inc. (NYSE:BRK-B).

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