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Companies and financial accounting
Companies and financial accounting

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1.3.2 A note on groups and holding companies

A shareholder can be a natural person, but it can also be another legal person (company). Nowadays, a company can be established for purposes other than trading goods or providing services. For example, companies can be set up to enjoy tax benefits or to create a control structure.

Often, what is referred to as a company is actually a group of companies owned by a parent company. Sometimes, the parent company is a holding company.

A holding company does not usually trade. Its sole purpose is to own the shares of other companies in a group, which it then controls through a pyramid structure of voting rights. Groups and holding companies are outside the scope of this course. However, since quoted companies are generally corporate groups, you will often come across groups and holding companies when looking for information on the internet.

In this course, we focus on single entity companies, that is, companies that are not part of a group. However, since quoted companies are generally corporate groups, you will often come across groups and holding companies when looking for information on the internet.