In a situation where the holding and subsidiary companies own shares in each other is known as-

Question

Question

This question was previously asked in

UGC NET Paper 2: Commerce 13th June 2023 Shift 2

Answer 1

The correct answer is Cross holding.

Important Points

Cross holding refers to a situation where two companies, often a parent company and its subsidiary, own shares in each other.
This creates a mutual ownership relationship. It's a complex ownership structure where both entities have a stake in one another.
One of the main benefits of cross holding is that it can strengthen the relationship between the two companies.
By owning shares in each other, the two companies are more likely to cooperate and work together.
This can be beneficial to both companies, as it can lead to increased sales and profits.

Additional Information

Partly owned subsidiary - This term generally refers to a subsidiary company in which the parent company owns less than 100% of the shares, implying shared ownership with other parties.
Subsidiary company - This is a company that is controlled by another company, referred to as the parent company. The parent company typically owns more than 50% of the subsidiary's shares.
Wholly owned subsidiary - In this scenario, the parent company owns 100% of the shares of its subsidiary, providing full control and ownership. This is the most straightforward form of subsidiary ownership.