A holding company is a corporation that legally holds (owns) shares in other companies. It is usually an LLC or LP holding enough equity interest in another company to control and manage its operations and profits. A holding company as such is often only used to control other business structures: it may be a corporation, an LP, or an LLC rather than producing its own goods or providing services. Holding companies can also be used to own a type of property. Holdings are commonly used as owners of real estate, intellectual property rights, stocks, and other assets. When a company is wholly owned by a holding company, it is referred to as a subsidiary.

Purpose of a holding company
An advantage of a holding company is that the assets of the holding company are very well protected against losses, claims and other risks. If one of the companies becomes insolvent, the holding structure as a whole will suffer a loss of capital and a reduction in net assets, however, the insolvent company's creditors will not be able to claim any holding company assets in the litigation. Thus, a large corporate structure may be organized as a holding company with only one subsidiary to own its IP rights, or alternatively to own real estate, equipment or franchise businesses. By building such a complex multi-layered holding structure, each subsidiary has quite limited financial and legal responsibilities aside from the parent company itself, making it a good asset protection solution. Forming a holding company structure can also reduce tax liability, which can be achieved by incorporating some parts of the company into jurisdictions with reduced or exempt taxes.

Holdings also allow private individuals to protect their income or assets. Instead of personally owning assets and taking full responsibility for one's debts, possible litigation, and other risk factors, the holding structure can instead hold the assets, thus only jeopardizing the assets of the holding company.

One of the main activities of a holding company is to oversee the subsidiaries it owns. It can hire and fire staff as needed, but the managers of the subsidiaries are independently held accountable for their decisions. Even if the parent company does not manage the day-to-day operations of the subsidiaries, the holding company shareholders should have a picture of what is going on and how these subsidiaries are operating in order to evaluate the performance and financial data.

Advantages of a holding structure
In addition to everything mentioned above, there are other important benefits of a holding structure.

Full operational control over all subsidiaries:

A holding company has full supervision and control over the subsidiary's board of directors. The parent company has the power to hire employees, including directors.
Can be used to own property:

A holding company can hold different types of property, including but not limited to real estate and intellectual property rights and other assets.
A holding company can not only hold its property, but also exploit and even pledge it and invest it.

Risk minimization:

Holdings are often used to own assets, thus usually such structures are owners of numerous valuable assets. Holding corporate structure provides legal opportunity to protect these assets from claims, damages, lawsuits and other risks.
Holdings can be organized in several different ways. This allows quite flexible asset distribution between all subsidiaries.
Holdings company can own and use property:

Putting your company’s intellectual property rights or any other assets into a holding structure may be very beneficial in terms of legal protection against potential risks.
Flexibility of participation in risky investment projects:

A holding company participating in high-risk investment projects can protect shareholders of a daughter company.
Board of directors of each of the companies must act in the best interests of their company:

The parent company and its subsidiaries are recognized as separate legal entities each, each having separate board of directors. The board of directors is liable for the company’s activities as well as they are bound to act in the best interests of the represented business.
Tax planning solution:

The holding structure may be set up entirely in a different jurisdiction, which offers decreased or exempted taxes.
The holding can be quite a beneficial structure, especially considering that it often has lower tax rates than a trust would usually have applied.