What is holding? , Definition and utility

You’ve certainly heard of a holding company already, but probably without fully understanding the definition. What is a Holding? In what cases should you consider creation? Here is some information.

What is a Holding?

The word “holding” comes from the English word “to hold” which means “to hold”. A holding company is a company whose corporate objective is the holding of shares in other companies (subsidiaries). Its establishment makes it possible to form a group of companies and ensure its control or management.

A holding company is a tool for structuring, financing and developing assets (thanks to the various benefits it offers). It can be passive or animator.

What is the interest of the holding company?

The cornerstone of the group, it can be established for the purpose of controlling subsidiaries, tax, financial and operational management optimization, or even transferring assets. Its interests are many, depending on your objectives. Observation !

Financial Benefits

The holding company allows you to take advantage of tax measures. Thanks to the tax consolidation mechanism, the tax on profits has become globalized between profit-making and loss-making companies. The second major tool, the tax alternative to the “mother-daughter” regime. This involves rolling back the income of subsidiaries to the level of the holding company while limiting the tax effect as these can be deducted from the overall result (with a 5% stake deduction for costs and fees). Note, these tools are subject to conditions.

Financial Benefits

This is the financial leverage effect of the holding company. By concentrating control, it enjoys greater bargaining power with banks than with individually taken subsidiaries. In the event of the acquisition of the company, it is possible to finance the debt thanks to the dividends received. In terms of financial management, it authorizes the establishment of cash agreements with subsidiaries.

operating profit

The holding company oversees the management of the subsidiaries and establishes a common policy. By offering subsidiaries the possibility to offer access to pool management services (administrative, accounting, etc.), it allows them to re-focus on their core business and provides the group with savings on operating costs.

transmission gain

Do you have a legacy to preserve and want to pass it on? By separating control and power, the holding company can prevent the disappearance of family businesses upon the death of the founder, for example (adjustment of governance rules).

It also makes it possible to estimate and organize the transmission of titles to heirs under favorable conditions (Dutrell-Transmission Pact). This is very interesting in the case of transmission of SCI shares (see our dedicated article).

In what cases should the creation of a holding company be considered?

You may consider forming a holding company in many cases (non-exhaustive list).

Managing and Transmitting a Legacy

The creation of a holding company should be considered to manage, protect and communicate its assets as it wishes, while benefiting from the tax benefits and limiting the required contribution of the buyer. Especially consider setting up an SCI holding company if it is a real estate asset.

acquisition of companies

Do you want to grow your business by buying shares? Take advantage of the financial leverage provided by the holding company to expand and diversify your assets by increasing your investment potential. Holding company is actually often used to buy a company.


Are you just looking to invest and diversify your assets? It is interesting to form a holding company to manage your investments and equity investments in other companies.

control of subsidiaries

This is the leverage effect at the legal level. It is sufficient to hold a majority of the shares of a holding company in order to control subsidiaries in which it is a majority (without a direct majority in each). Thus the majority of the shareholders of the holding retain control while limiting their contributions and being able to bring in new investors.

Holding Type

Depending on the objectives, there are different types of holding companies.

family holding

A family holding makes it possible to ensure the continuity of a company within the same family, especially in the event of disagreements between the heirs over the continuity of activity. This would make it possible to give management power to the successor interested in pursuing, while distributing the capital equitably among all.

Buyout Holding

As we have seen, the holding company makes it possible to profit from the financial and legal leverage effect. With a buyout holding company, it is possible to finance the acquisition of companies through debt, which will be reimbursed by dividends from the target companies.

For more information, you can check out our full article on Buyout Holding Company.

financial holding

We speak of a financial holding company when it is set up to bring together shareholders and manage a portfolio of shareholdings in a centralized manner, while taking advantage of the various benefits that leveraged effects provide in terms of growth (especially the convenience of all credit transactions).

questions to ask

What are the disadvantages of a holding company?

The holding company has not only advantages. Its creation and management requires administrative and consultancy costs which can be overwhelming to bear. Also pay attention to the conditions for availing tax benefits to avoid any risk of recovery.

Which status to choose for holding company?

The choice of the legal form of your holding company is free. This will depend on your situation (number of partners, share capital, method of taxation, etc.). Do not hesitate to seek advice on choosing the appropriate form.

What is the taxation for a holding company?

The holding company may be subject to IS or IR depending on its legal status and the option chosen. Please note that availing most of the tax benefits is subject to the IS regime.

Related Stories


Zen by LegalStart: An anti-scam shield for entrepreneurs

Created almost ten years ago with the aim of simplifying and digitizing the legal...

social network, an opportunity

Social networks have invaded our world. Facebook, Twitter, LinkedIn, YouTube, Pinterest, Instagram... and...

Self-employment in France: revival of activities and income

At the end of 2021, France will have no less than 3.9 million self-employed...

fundraising fashion

Fundraising has become a major trend in the business world. Whether promising startups,...

Ten Mistakes Entrepreneurs Shouldn’t Make

Almost every day, we learn that new laws are coming,...

Which tools for more efficient management?

There are many responsibilities involved in managing a DSI (Department of Computer Services). ...

Popular Categories



Please enter your comment!
Please enter your name here