Holding Company Definitions
Holding Company
A holding company is a type of business entity that doesn't typically engage in the production of goods or services itself. Instead, its primary purpose is to own shares of other companies, often called subsidiaries. These subsidiaries can be other corporations, limited liability companies (LLCs), or other types of business entities.
Subsidiary
A subsidiary refers to a company that is controlled by another company, known as the parent company or holding company. The subsidiary is typically a separate legal entity, such as a corporation or a limited liability company (LLC), with its own assets, liabilities, and operations
Parent Company
A parent company, also known as a holding company or a controlling company, is a corporation that owns a controlling interest in one or more other companies. The parent company typically holds a majority of the voting shares or membership interests of its subsidiaries, giving it significant control over their operations, management, and strategic decisions.
Mixed Holding Company
A mixed holding company, also known as a diversified holding company, is a type of holding company that owns and controls subsidiaries operating in multiple, unrelated industries or sectors. Unlike specialized holding companies that focus on a specific industry or business niche, a mixed holding company has diverse business interests across various sectors.
Operating Company
An operating company, also known as an operating business or operating subsidiary, is a company that is engaged in active business operations, producing goods or services for sale in the market. Unlike holding companies, which primarily exist to own and control other companies (subsidiaries), operating companies are directly involved in the production, distribution, and sale of goods or services to customers.
Pure Holding Company
A pure holding company, also known as an investment holding company or a passive holding company, is a type of holding company that exists solely to own and manage investments in other companies, rather than engaging in operational activities itself. Unlike operating companies, which are directly involved in producing goods or services, pure holding companies primarily hold ownership stakes in other businesses as passive investments.
Limited Liability Companies - LLC’s
A Limited Liability Company (LLC) is a type of business structure that combines the limited liability protection of a corporation with the flexibility and pass-through taxation of a partnership or sole proprietorship. LLCs are a popular choice for small businesses, startups, and entrepreneurs due to their simplicity, flexibility, and favorable legal and tax treatment.
Company Articles
Company articles, also known as articles of association, are legal documents that set out the rules and regulations for the internal management and governance of a company. Articles of association are a key component of a company's constitution, along with its memorandum of association, and they establish the rights, duties, powers, and responsibilities of the company's shareholders, directors, and officers.
Lifetime Capital Gains Exemption (LCGE)
A tax provision available in Canada that allows individuals to shelter a certain amount of capital gains from taxation over their lifetime. For example, the LCGE applies to the sale of qualified small business corporation shares, qualified farm property, and qualified fishing property. It's important to note that the rules and thresholds related to the LCGE may vary from one jurisdiction to another, so individuals should consult with a tax professional or authority in their specific country for accurate and up-to-date information.
