Holding

A holding company, also known as a holding, is a legal entity that does not, or only marginally, engages in operational activities but primarily acts as a shareholder in one or more subsidiaries. This structure enables the separation of ownership, control and risk from day-to-day operations.

In Dutch practice, a holding company is commonly used for tax optimisation, asset protection and to facilitate acquisitions or succession planning. The holding company holds the shares in the operating company, thereby segregating profits and risks.

For legal practitioners, holding companies are relevant in corporate structuring, mergers and acquisitions, shareholders’ agreements and liability issues, as the holding often serves as the central entity within a corporate group.