What is Holding?
A holding company is a company that acts as the parent of other companies, holding a majority stake in the shares of its subsidiaries. Holding is not a corporate type, but a way of managing business groups that aims to reduce the tax burden, return capital in the form of exempt profits and succession planning.
Legally formalized in Brazil with law number 6.4040 / 76, known as the Brazilian Corporate Law, holdings can be of two types: pure, whose only corporate purpose is to control the shares of other companies; or mixed, which also produce goods or services.
As for the type of company formed, there are those of limited liability companies. In the case of anonymous companies, the shareholder’s responsibility and participation is restricted to the price of their shares.
In limited liability companies, the articles of association state that the shareholders’ obligation is limited to their participation in company shares, although all partners are jointly liable for the share capital.
The succession process can also be established in the contract, regulating how the partners enter and leave, as well as the sale of quotas, protecting the assets of the business group. For this reason, this type of company is the most used in the case of the formation of a Family Holding.
There is also the corporate figure of Holding Patrimonial, a company dedicated to the management of assets and businesses of individuals. The objective is to protect assets and achieve better conditions in terms of capital taxation, especially that of inheritance transfer.
A very common example is property management. An individual whose income comes from rent is taxed at 27.5% by the Income Tax, while a company opting for Presumed Profit to 11.33% by the income from the same equity. The use of the holding company also ensures that the assets cannot be exposed to tax or labor claims, as there is no communication between the assets of the partners and those of the company.
J&F Investimentos is a privately held holding company, which has among its subsidiaries the companies JBS and Vigor (food sector), Flora (personal hygiene and cleaning), Eldorado do Sul (paper and cellulose), Canal Rural (media) and Alpargatas SA (clothing). Among the brands belonging to these companies and controlled by J&F are Havaianas, Osklen and Friboi.
The merger of Itaú and Unibanco in 2008 created one of the 20 largest financial holding companies in the world, Itaú Unibanco Holding SA, whose capital is publicly traded.
Difference between Holding and Joint Venture
The main difference between Holding and Joint Venture is about the independence of the parties. Join Venture is an agreement between companies with a common objective, which is broken when this objective is reached, and the legal personalities of the parties remain intact.
In the case of a Holding, there is the figure of the parent company that holds most of the shares of its subsidiaries, exercising power of administration and financial control of the group companies, that is, these legal persons are not independent.
Holding and Trust
Truste is a business maneuver to guarantee a group of entrepreneurs control of the market. The companies leave their legal personalities and form a new organization with the same entrepreneurs in the majority shareholding, thus controlling the management of the company, which in turn holds a good part of the offer of products and / or services in the market. What constitutes unfair competition with companies outside the agreement, or incoming, and loss to the consumer.
When companies are homogeneous and operate in the same market, it is called the Horizontal Trust. And Vertical Trust is when the same organization controls the entire supply chain for a given business, including the group from the producer to the final product.
Bearing in mind that the trust has been prohibited by law in Brazil since 1994, with the Antitrust Law, the holding company becomes a legal maneuver to effect the same type of control, mainly in the stock market. This type of agreement is controlled by the Administrative Council for Economic Defense (CADE), to guarantee free competition.