Can You Explain The Disadvantages Of Holding Company?


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Ellie Hoe answered
There are various disadvantages of holding companies. Firstly, according to the law of the state, if a parent company holds 80% of the subsidiary, then the holding company has to pay multiple taxes like state tax and federal tax. Secondly, a holding company can be dissolved relatively easy as compare to the other companies like single merged operations. Thirdly, if the holding companies go for expansion through leverage, and debt then they form the complex capital structure and they undergo more interest rate risks.

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