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LSDefine
Simple English definitions for legal terms
holding company
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A quick definition of holding company:
A holding company is a type of business that owns a lot of stock in another company. This means they have control over how that company is run. Holding companies have to follow certain laws to make sure they are fair and don't do anything that hurts competition or investors. They are important in the business world because they help companies work together and grow.
A more thorough explanation:
A holding company is a type of corporation that owns enough voting stock in another corporation to control its policies and management. This means that the holding company has the power to make decisions for the other company. Holding companies are regulated by laws such as the Securities Exchange Act of 1934 and the Investment Company Act of 1940.
For example, in the case of United States v. America Tel. & Tel. Co., the court had to decide whether a holding company could be regulated as a "public utility" under the Communications Act of 1934. Another case, United States v. Philip Morris Inc., dealt with whether a holding company could be held responsible for the actions of its subsidiary companies.
These examples show how holding companies can have a significant impact on the business world and why they are subject to regulations. The laws aim to protect investors, promote competition, and prevent holding companies from engaging in anti-competitive practices.