Also known as a parent corporation, a holding company owns a portfolio of businesses in which it has enough voting stock to exert de facto control. Businesses range from limited liability companies to corporations. A holding company can also invest in trademarks, real estate, patents, and stocks.
A holding company is protected from bankruptcies filed by businesses in which it has a vested interest. While the parent corporation does not undergo bankruptcy as a result of its investment, it still loses money and overall value. For this reason, it is not uncommon for a corporation to establish itself as a holding company with multiple subsidiaries for an additional layer of protection. Each subsidiary owns different assets, such as equipment and franchises. The corporation is left with limited financial and legal liability as well as tax obligations.