WHAT YOU NEED TO KNOW ABOUT HOLDING COMPANIES IN NIGERIA

yakubu May 9, 2021
    1. A Holding Company is a Company that holds more than 50% shares in a Subsidiary Company, or a Company that controls the composition of a Subsidiary Company Board of Directors. (Board of a company is said to be controlled if without consent the Holding Company  can remove/appoint majority or all of its directors )
    2. A Holding and a Subsidiary Company are separate and distinct legal entities. 
    3. The term ‘Holding Company’ is used because the business “holds” other investments (the subsidiaries).
    4. A Holding Company Oversees and manages the overall activities of the Subsidiary Companies. In essence a Holding Company manages the affairs and exercise control of its Subsidiaries.
    5. A Holding Company appoints the management that oversees the day to day activities of its Subsidiary Companies. 
    6. In most cases, a Holding Company does not have activities, operations, or other active businesses other than owning assets in its Subsidiary Companies. 
    7. The law does not expressly stop a Holding Company from conducting business. 
    8. A Holding Company can either own all the stocks of its subsidiary companies (wholly owned subsidiary), or majority of the stocks. 
    9. There is no limit to the number of Subsidiaries that a Holding Company can have. New and existing Companies can apply to become a Holding company. An example of Holding of Company is First Bank Holding Nigeria Plc, with the following subsidiaries: FBN Bank Guinea, FBN Merchant Bank, FBN Bank (UK) Ltd, FBN Bank Ghana. 
    10. A Holding Company accord investors the room to make a wide range of investments. 

Categories: Corporate Law
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