One of Nigeria’s most prominent banks, Zenith Bank announced on Friday, 3rd of March approval in principle by the Central Bank of Nigeria to become a holding company.
The announcement was made known to the public in a statement signed by its Secretary, Michael Otu. So, in this article, the focus is to present to you the functions of a holding company.
A holding company is a type of business organization that owns a controlling interest in one or more other companies, called subsidiaries. The holding company does not usually engage in any business operations or produce any goods or services itself. Instead, it exists to own and manage the subsidiaries and to receive income from their operations.
Holding companies are often used to achieve specific business objectives, such as consolidating ownership of a group of companies, simplifying complex corporate structures, or separating different lines of business to reduce risk. By owning multiple subsidiaries, a holding company can diversify its portfolio of investments and reduce its exposure to any one particular industry or market.
The subsidiaries of a holding company can operate independently, but they are often subject to oversight and management by the holding company’s board of directors. The holding company may provide financing, strategic guidance, or other resources to its subsidiaries as needed to support their operations and growth.
Holding companies can be publicly traded or privately held, and they can be formed in various legal structures, including as a corporation, limited liability company, or partnership.
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