What Is a Closely Held Corporation?

A holding company is a company that controls a company by holding a certain number of shares in that company. Holding companies are divided into pure holding companies and mixed holding companies according to the holding methods. A purely holding company does not directly engage in production and business operations, but only conducts capital operations by holding shares of other companies. In addition to capital operations through holdings, hybrid holding companies also engage in some production and operation businesses.

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Holding companies not only have financial control of subsidiaries, but also control of operations. They also have the power to decide on the appointment of important personnel and the determination of major policies, and even directly send people to manage operations. Also called parent-subsidiary system.

The company that owns the shares of other companies and can actually control its business activities is called the parent company, sometimes also the head office; the assets are wholly or partly owned by the parent company, but are economically and legally independent of the parent company Called a subsidiary. With the extension of the controlling stake, there is also Sun. ^[1]

Pure holding company

It does not engage in any actual business, and only purchases stock to control other enterprises as its sole purpose and method of operation.

Mixed holding company

It not only controls other companies by buying stocks, but also engages in certain business operations. U.S. 1970

A holding company, as an organizational form of a modern enterprise, has both the characteristics of a company system and some differences from other company forms. Its characteristics and advantages are as follows:

Have considerable economic scale

A holding company is different from a general company. It is a collection of enterprises, which is the result of the development of a general company to a considerable scale. Because a company must have considerable strength to form a controlling relationship with other companies. After the establishment of a holding company, it will inevitably form a stronger economic entity than a single company. Therefore, the major international companies are basically holding companies. Some outstanding domestic companies are also developing towards the direction of holding operations.

Closely link companies with assets

A holding company is a type of property right management organization generally used abroad. It is not the same as an enterprise that is directly engaged in the production of goods, nor is it a simple product cooperation relationship or an enterprise-to-company cooperation relationship. It is mainly engaged in the management and operation of the company's property rights based on equity relations through the form of holding shares, or through equity participation, Holding or mutual holdings to promote the group's commodity operations. In fact, these holding companies have formed enterprise groups based on asset relationships.

The holding company system is a very convenient and effective concentration of enterprises, that is, a way to form an enterprise group. The holding company not only enjoys dividends from other companies, but also exerts influence on the decisions of other companies and exercises shareholder rights in accordance with the ownership of shares.

The held company has the status of a legal person

Another important feature of the holding company is that the parent company and the controlled subsidiary are legally independent of each other in terms of legal personality, and based on the combination of capital, they adopt a part-time director system. This is a major difference between a holding company and a division. Although the division system is a highly decentralized system adopted by large companies, each division is generally incapable of personality. The holding company is an independent legal person, forming a company within the company. Each subsidiary is a completely decentralized unit for profit management. It has an independent operating management organization, has sole responsibility for profit, and has independent financing capabilities.

Holding company is a whole

Although the parent company and subsidiary of the holding company are independent

Financial capital has more benefits than setting up various companies directly:

1. Can use less capital for more extensive control.

2. The purpose of control can be achieved in a short time. Because holding companies buy stocks of existing companies, which is much easier and faster than building a new business.

3. It can use the operating results that the existing enterprises have obtained. Such as the already opened markets and various business contacts, signs and trademarks that have been accepted by the public, and the company's reputation, etc., thereby avoiding the difficulties of starting a business.

4, can reduce operational risks. Because the investment of the holding company is scattered in many enterprises, the company's business performance and profitability can often be leveled, so as to ensure a relatively stable profit, which is much more insurance than investing in a certain type of business alone.

5. As the holding company unites many decentralized enterprises into one entity, the tax payable can often be reduced.

6. Many legal controls or restrictions can be avoided. For example, when some local governments and countries prohibit foreign or foreign companies from setting up companies in the region or country, holding companies can evade such legal restrictions by purchasing shares of local companies. It is precisely because shareholding companies often get these benefits that financial capitalists are happy to establish such companies.

I. Conditions that a holding company whose name needs to be approved by the General Administration (such as China XX Holdings Limited):

1. The registered capital of the holding company is more than 50 million yuan (the parent company should be a corporate enterprise; the core enterprise

Articles of holding company

Chapter I General Provisions

The first is to regulate the organization and operation of ×××× (Shares) Co., Ltd. (hereinafter referred to as the Company) to protect the legitimate rights and interests of shareholders and creditors. ), The "Interim Regulations on the Supervision and Management of State-owned Assets of Enterprises" and relevant national laws and regulations, as well as relevant regulations of the People's Governments of Zhejiang Province and Wenzhou (hereinafter referred to as "provincial and municipal governments"), have formulated this charter.

Article 2 Company registered name: ××××.

Company registered address: ××××, postal code: ×××.

Article 3 The company's business activities and other activities shall abide by the laws and regulations of the People's Republic of China, accept the supervision and management implemented by relevant departments in accordance with the law, and shall not damage the legitimate rights and interests of shareholders.

Article 4 The company is a xxx limited company, which has independent legal person property, enjoys the legal person's property rights, and assumes liability for the company's debts with all its property. Shareholders are liable to the company to the extent of their contribution.

Article 5 This Article of Association is binding on the company, its directors, supervisors, general managers, deputy general managers and other senior management personnel and other organizations and individuals as required by laws and regulations.

Article 6 The chairman (or general manager) is the legal representative of the company.

Article 7 According to the needs of business development, and in accordance with the relevant laws and regulations, the company may establish subsidiaries or branches in China and abroad after approval by relevant departments.

Article 8 The company shall establish a party organization in accordance with the provisions of the Constitution of the Communist Party of China. Party organizations are at the core of politics in the company, giving play to the role of political leadership, ensuring and supervising the implementation of the party's and state's lines, guidelines and policies in the company.

Article 9 The company shall establish and improve the system of employee congresses, implement democratic management, and protect the legitimate rights and interests of employees.

Article 10 The company shall obey the management activities carried out by the competent departments of various industries in accordance with the law, and accept the guidance, coordination, supervision and inspection carried out by the relevant management departments in accordance with the law.

Chapter II Business Purpose and Scope

Article 11 Business purposes of the company: ××××××.

Article 12 Business scope of the company: ××××××.

Chapter III Company Registered Capital and Shareholders

Article 13 The company's registered capital is RMB ××× 100 million.

Article 14 The company consists of × shareholders:

Shareholder 1: (full name of corporate shareholder)

Legal representative name: ×××

Legal address: ××××

Contribute ×× 10,000 yuan in the form of ×××, ......, a total of ××× 10,000 yuan, which together account for ××% of the registered capital, and pay in full in one year before (××××) ×× 10,000 yuan, of which the first phase of investment ×× 10,000 yuan, will be in place before × year × month × day, the second phase of investment ×× 10,000 yuan, will be in place before × year × month × day, ...; by ××× ×× 10,000 yuan, ; total investment ××× 10,000 yuan, accounting for ××% of the registered capital).

...

Shareholder ×: (name of natural person)

Home Address: ××××

ID number: ××××

Contribute ×× 10,000 yuan in the form of ×××, ......, a total of ××× 10,000 yuan, which together account for ××% of the registered capital, and pay in full in one year before (××××) ×× 10,000 yuan, of which the first phase of investment ×× 10,000 yuan, will be in place before × year × month × day, and the second phase of investment ×× 10,000 yuan, will be in × year & ti

mes; in place before the day of the month, ...; capital contribution of × × ten thousand yuan in the manner of × × ×, ...; total investment of × × × ten thousand yuan, accounting for × ×% of registered capital) Chapter IV Shareholders' Meeting

Article 15 The company shall have a shareholder meeting. The shareholders meeting is composed of all shareholders and is the highest authority of the company.

Article 16 The shareholders' meeting shall exercise the following functions and powers according to law:

(1) to review the company's development strategic plan and decide on the company's operating policy and investment plan;

(2) to elect and replace directors and supervisors who are not represented by employee representatives, and to determine matters concerning the remuneration of directors and supervisors;

(3) examining and approving the report of the board of directors;

(4) to consider and approve the report of the board of supervisors;

(5) review and approve the company's annual financial budget plan and final accounts plan;

(6) Examining and approving the company's profit distribution plan and compensation plan;

(7) making a resolution on the increase or decrease of the registered capital of the company;

(8) making a resolution on the issue of corporate bonds;

(9) to make a resolution on the merger, division, dissolution, liquidation or change of company form;

(10) For major matters such as the merger, division, dissolution, liquidation, and equity transfer of a company, as well as major matters such as external investment and external guarantees, the shareholder representatives assigned by the Municipal SASAC shall implement in accordance with the administrative measures issued by the Municipal SASAC, Perform the approval procedures according to law.

(11) review and approve the amendment of the company's articles of association;

(12) Other functions and powers provided by laws and regulations.

Article 17 The shareholders' meetings are divided into regular meetings and ad hoc meetings. Regular meetings shall be held within six months after the end of the previous fiscal year. Upon the proposal of shareholders representing more than one-tenth of the voting rights or more than one-third of the directors or the board of supervisors, an extraordinary shareholders' meeting shall be convened.

Article 18 Procedures of the shareholders meeting:

(1) The shareholders' meeting is convened by the board of directors and chaired by the chairman; if the chairman fails to perform his duties or fails to perform his duties, he is chaired by the vice chairman; if the vice chairman cannot perform his duties or fails to perform his duties, more than half of the directors jointly recommend one director Host.

(2) If the board of directors fails or fails to perform the duties of convening a meeting of the shareholders' meeting, it shall be convened and presided over by the board of supervisors; if the board of supervisors fails to convene and preside, shareholders representing more than one-tenth of the voting rights may convene and preside over it by themselves.

(3) To convene a shareholders 'meeting, all shareholders' representatives shall be notified 15 days before the meeting is convened.

The shareholders' meeting shall make a meeting record of the decision on the matters discussed, and the shareholder representatives present at the meeting shall sign the meeting record.

Article 19 Voting methods of shareholders' meetings:

(1) At shareholders' meetings, shareholders exercise voting rights (or make other special provisions) in accordance with the proportion of capital contribution.

(2) The resolutions of the shareholders' meeting to amend the company's articles of association, increase or decrease the registered capital, and the company's resolution to merge, split, dissolve or change the form of the company must be passed by shareholders representing more than two-thirds of the voting rights.

Resolutions on other matters made at shareholders' meetings must be passed by shareholders representing more than one-half of the voting rights.

Article 20 Shareholders shall ensure that the company's registered capital is in place and bear limited liability to the company within the limit of the amount of capital contribution, and shall not withdraw capital contribution.

Article 21 Shareholders of a company shall abide by laws, administrative regulations and articles of association, exercise shareholder rights in accordance with the law, shall not abuse shareholder rights to damage the interests of the company or other shareholders, and shall not abuse the independent status of the company's legal person and the limited liability of shareholders to damage the interests of creditors.

If the shareholders of the company abuse the shareholders' rights and cause losses to the company or other shareholders, they shall be liable for compensation in accordance with the law.

A company shareholder who abuses the independent status of the legal person of the company and the limited liability of shareholders, evades debts, and seriously damages the interests of creditors, shall bear joint and several liabilities for the company's debts.

Article 22 The content of resolutions of the company's shareholders' meeting that violate laws and administrative regulations is invalid.

If the convening procedure or voting method of the shareholders' meeting violates laws, administrative regulations or the company's articles of association, or the content of the resolution violates the company's articles of association, the shareholders may request the people's court to revoke it within 60 days from the date of the decision.

If the company has completed the change registration in accordance with the resolution of the shareholders' meeting, after the people's court declares the resolution invalid or revokes the resolution, the company shall

Apply to the company registration authority to cancel the change registration. Chapter V Board of Directors

Article 23 The company has a board of directors, which is elected by the shareholders meeting and is responsible to the shareholders meeting.

Article 24 The company's board of directors consists of × director members, of which × are employee directors. If a director is nominated by a shareholder, it is elected by the shareholders' meeting; if a director is appointed by a staff representative, it is democratically elected by the staff representative meeting (or staff meeting).

The board of directors has one chairman and one vice chairman × person. The chairman and vice chairman of the company are elected by all directors.

The term of each term of the board of directors is three years, and the term of office of the directors expires. If the director's term of office has not been re-elected in a timely manner, or the resignation of the director during the term of office has resulted in the number of members of the board of directors being less than the quorum, the original director should still perform the duties of director in accordance with the laws, administrative regulations and the articles of association before taking office.

Article 25 Directors shall enjoy the following rights according to law:

(1) attending the board of directors and exercising voting rights in accordance with relevant regulations;

(2) Perform relevant business on behalf of the company in accordance with the company's articles of association or the commission of the board of directors;

(3) Other rights provided by laws and regulations and the company's articles of association.

Article 26 The directors of a company shall bear the following obligations:

(1) abide by laws and regulations and the company's articles of association, implement board resolutions, faithfully perform their duties, and safeguard the legitimate rights and interests of the company and shareholders in accordance with the law;

(2) not to run a business similar to the company or to engage in activities that harm the company's interests;

(3) not to disclose the company's commercial secrets, or to use its powers to seek business opportunities for itself or others that should belong to the company;

(4) to provide shareholders with reports on the company's major decisions, major financial events and assets in accordance with relevant regulations;

(5) Accepting the legal supervision and reasonable suggestions of the board of supervisors on the performance of their duties;

(6) Other obligations that should be assumed according to law.

Article 27 The board of directors is responsible to the shareholders 'meeting and exercises the following functions and powers within the scope of laws, regulations and the authorization of the shareholders' meeting:

(1) to convene a meeting of the shareholders 'meeting, implement the resolutions of the shareholders' meeting, and report to them;

(2) to formulate the company's articles of association and amendments to the articles of association;

(3) Formulating the company's development strategic plan;

(4) Formulating annual investment plans in accordance with the company's development strategic plan;

(5) Deciding on the company's business plan and investment plan;

(6) Deliberating the adjustment, merger, division, and dissolution plans of the subsidiaries of the company and submitting them to the shareholders' meeting for approval;

(7) Deciding the investment, capital operation and financing plan of the company within the scope of authorization;

(8) to review the company's annual financial budget plan and final accounts plan, and report to the shareholders' meeting for approval;

(9) Review the company's profit distribution plan and loss compensation plan, and report to the shareholders' meeting for approval;

(10) to formulate a plan for the company to increase or decrease its registered capital and issue corporate bonds, and submit it to the shareholders' meeting for approval;

(11) Deciding on the company's internal management agency setup plan;

(12) Formulating various basic rules and regulations of the company;

(13) hiring or dismissing the company's general manager and other senior management personnel in accordance with relevant regulations and procedures, and deciding to appoint or dismiss the person in charge of finance and its compensation matters based on the nomination of the general manager;

(14) Other functions and powers provided by laws and regulations and authorized by the shareholders' meeting.

Article 28 (If the general manager is the legal representative of the company, this article shall be adjusted accordingly) The chairman exercises the following functions and powers:

(1) Convening and presiding over board meetings, presiding over the daily work of the board of directors, exercising part of the functions and powers of the board of directors during the adjournment of the board of directors;

(2) urging and inspecting the implementation of resolutions of the board of directors;

(3) Sign the annual operating responsibility letter with the legal representative of the wholly-owned and holding company invested according to the authorization of the board of directors;

(4) signing the company's issuance of bonds and other securities, signing important contracts and important documents of the board of directors, issuing various appointment or dismissal documents in accordance with the board of directors' resolutions, and signing other documents that should be signed by the legal representative of the company;

(5) in the event of force majeure such as an extraordinary natural disaster, exercise special disposal rights in compliance with laws, regulations and company interests in corporate affairs, and report to the company's board of directors and shareholders' meetings after the fact;

(6) Other functions and powers prescribed by laws and regulations and the company's articles of association shall be exercised by legal representatives and other powers authorized by the board of directors.

Article 29 The board of directors of the company shall be convened at least twice a year, and all directors shall be notified ten days before the meeting.

Meetings of the company's board of directors must be attended by more than half of the directors. The board meeting of the company is convened and chaired by the chairman. If the chairman is unable to perform his duties or fails to perform his duties, the vice chairman shall perform his duties; if the vice chairman is unable to perform his duties or fails to perform his duties, more than half of the directors shall jointly recommend one director to convene and chair.

An interim board meeting shall be convened within ten days under the following circumstances:

(1) a request to be held on behalf of a shareholder representing more than one-tenth of the voting rights;

(2) more than one-third of the directors propose to convene;

(3) It was proposed to be convened by the board of supervisors.

Article 30 The board of directors shall be attended by the directors themselves. If they are unable to attend for any reason, they may authorize other directors to attend in writing. The power of attorney shall specify the scope of authorization. ^[3]

Book title

Holding company

Author

Morita Matsutaro

Publishing house

CITIC Publishing House

table of Contents

This book is composed of five chapters: Chapters 1 and 2 are general introductions; Chapters 3 and 4 are about the actual operation of holding companies; Chapter 5 focuses on the direction of holding companies facing backbones and small and medium-sized enterprises.

What Is a Closely Held Corporation?

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