Types of companies

A holding company is a company that owns part, all, or a majority of other companies'

outstanding stock. It usually refers to a company which does not produce goods or

services itself, rather its only purpose is owning shares of other companies. Holding

companies allow the reduction of risk for the owners and can allow the ownership and

control of a number of different companies.

A parent company is a holding company that owns enough voting stock in another firm

(subsidiary) to control management and operations by influencing or electing its board of

directors. A parent company could simply be a company that wholly owns another

company.

A conglomerate is the term used to describe a large company that consists of seemingly

unrelated business sections. This term may also be referred to as a multi-industry

company.

A subsidiary, in business matters, is an entity that is controlled by a bigger and more

powerful entity.

A shell corporation is defined in Barron's Finance & Investment Handbook as "a

company that is incorporated, but has no significant assets or operations." Shell

corporations are not in themselves illegal and they may have legitimate business

purposes.

An investment company is a company whose main business is holding securities of

other companies purely for investment purposes. The investment company invests money

on behalf of its shareholders who in turn share in the profits and losses.