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29-499: Associated Electrical Industries (AEI) was a British holding company formed in 1928 through the merger of British Thomson-Houston (BTH) and Metropolitan-Vickers electrical engineering companies. In 1967 AEI was acquired by GEC , to create the UK's largest industrial group. A scandal that followed the acquisition is said to have been instrumental in reforming accounting practices in the UK. Rivalry existed between Metrovick and BTH brands in

58-411: A corporation with the rights to an eighty percent dividends received deduction can deduct the dividend amount only up to eighty percent of the corporation's taxable income. There are two exceptions to The Taxable Income Limitation. No taxable income restriction is placed on a corporation with a one-hundred percent dividends received deduction. Second, if the dividends received deduction increases or creates

87-463: A market weakening of the company. These problems paved the way for a takeover in 1967 with the recently restructured General Electric Company (GEC) under Arnold Weinstock . The following year GEC merged with English Electric . GEC took over AEI Cables and Hackbridge Cables Co. in 1967, forming the company AEI Cables Ltd. in 1968. GEC also went through substantial restructuring, including in 1989 forming GEC Alsthom and Cegelec Projects. GEC Alsthom

116-421: A net operating loss, the limitation does not apply. For purposes of determining the appropriate dividends received deduction, a corporate shareholder's taxable income should be computed without including net operating losses (NOL's), capital loss carrybacks, and the dividends received deduction. In order to receive the tax benefit of a dividends received deduction, a corporate shareholder must hold all shares of

145-439: A new company and keeps majority shares with itself, and invites other companies to buy minority shares, it is called a parent company. A parent company could simply be a company that wholly owns another company, which is then known as a " wholly owned subsidiary ". Dividends received deduction This deduction is designed to reduce the consequences of alleged triple taxation . Otherwise, corporate profits would be taxed to

174-513: A parent company material influence if they are the largest individual shareholder or if they are placed in control of the running of the operation by non-operational shareholders.) In the United Kingdom, the term holding company is defined by the Companies Act 2006 at section 1159. It defines a holding company as a company that holds a majority of the voting rights in another company, or

203-432: A single consolidated return for U.S. federal income tax purposes. Generally, if a corporation receives dividends from another corporation, it is entitled to a deduction of 50 percent of the dividend it receives. If the corporation receiving the dividend owns 20 percent or more, then the amount of the deduction increases to 65 percent. If, on the other hand, the corporation receiving the dividend owns more than 80 percent of

232-624: Is a member of another company and has the right to appoint or remove a majority of its board of directors, or is a member of another company and controls alone, pursuant to an agreement with other members, a majority of the voting rights in that company. After the financial crisis of 2007–2008 , many U.S. investment banks converted to holding companies. According to the Federal Financial Institutions Examination Council 's website, JPMorgan Chase , Bank of America , Citigroup , Wells Fargo , and Goldman Sachs were

261-471: Is defined by Part 1, Section 5, Subsection 1 of the Companies Act, which states: 5.—(1) For the purposes of this Act, a corporation shall, subject to subsection (3), be deemed to be a subsidiary of another corporation, if — In the United Kingdom, is generally held that an organisation holding a 'controlling stake' in a company (a holding of over 51% of the stock) is in effect the de facto parent company of

290-461: Is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own stock of other companies to form a corporate group . In some jurisdictions around the world, holding companies are called parent companies , which, besides holding stock in other companies, can conduct trade and other business activities themselves. Holding companies reduce risk for

319-485: Is under a contractual obligation to sell, or has made a short sale of substantially identical securities. In revenue ruling 94-28, the Internal Revenue Service (IRS) explains that the principle behind §246(c)(4) is to deny credit toward the 45-day holding period for any period during which the taxpayer is protected from the risk of loss inherent in the ownership of an equity interest. Code Section 246A disallows

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348-454: The Trade Union and Labour Relations (Consolidation) Act 1992 ). The Employment Appeal Tribunal ruled that it was not reasonable to expect an insolvent employer to continue trading for 90 days in order to accommodate this legal requirement and in these particular circumstances ruled that 60 days was sufficient. Holding company A holding company is a company whose primary business

377-476: The broadcast licenses to reflect this, resulting in stations that are (for example) still licensed to Jacor and Citicasters , effectively making them such as subsidiary companies of their owner iHeartMedia . This is sometimes done on a per- market basis. For example, in Atlanta both WNNX and later WWWQ are licensed to "WNNX LiCo, Inc." (LiCo meaning "license company"), both owned by Susquehanna Radio (which

406-442: The shareholders , and can permit the ownership and control of a number of different companies. The New York Times uses the term parent holding company . Holding companies can be subsidiaries in a tiered structure . Holding companies are also created to hold assets such as intellectual property or trade secrets , that are protected from the operating company. That creates a smaller risk when it comes to litigation . In

435-546: The Alstom banner. An issue relevant to UK employment and insolvency law arose in 2011, when there was a steep increase in the price of copper ; AEI Cables Lid. experienced difficult trading conditions and declared itself insolvent . Considering making some staff redundant , they were challenged in the Employment Tribunal for failing to comply with the requirement for 90 days of consultation under TUPE law (section 188 of

464-470: The Electrical Engineering field, resulting in internal competition and duplicated management. In 1959 AEI decided to remove those brands and consolidate both as AEI brands, resulting in internal problems and a fall in sales and market value. The abandonment of two well known trademarks and the replacement with the unfamiliar AEI branding lost the company significant work to competitors and resulted in

493-502: The United States, 80% of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed. That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay taxes on dividends paid by Company B to its stockholders, as the payment of dividends from B to A is essentially transferring cash within a single enterprise. Any other shareholders of Company B will pay

522-472: The benefit of the dividends received deduction for debt financed purchases of corporate portfolio stock. As stated by the Joint Committee on Taxation, the provision reduces the deduction for dividends received on debt-financed portfolio stock. Therefore, the dividends received deduction is available only with respect to dividends “attributable” to stock financed through other means besides debt. A simple ratio

551-434: The corporation that earned them, then to the corporate shareholder, and then to the individual shareholder. While Congress allowed for double taxation on corporations, it did not intend a triple - and potentially infinitely-tiered - tax to apply to corporate profits at every level of their distribution. The dividends-received deduction complements the consolidated return regulations, which allow affiliated corporations to file

580-420: The distributing corporation's stock for a period of more than 45 days. Per §246(c)(1)(A), a dividends received deduction is denied under §243 with respect to any share of stock that is held by the taxpayer for 45 days or less. The complexity of this limitation is amplified per §246(c)(4). Section 246(c)(4) states that the stock's holding period is reduced for any period in which the taxpayer has an option to sell,

609-434: The distributing corporation, it is allowed to deduct 100 percent of the dividend it receives. Note that in order for the deduction to apply, the corporation paying the dividend must also be liable for tax ( i.e. , it must be subject to the double taxation that the deduction is intended to prevent). S corporations are not eligible for a dividends received deduction, as they are considered a pass-through entity , which taxes

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638-431: The firm, having overriding material influence over the held company's operations, even if no formal full takeover has been enacted. Once a full takeover or purchase is enacted, the held company is seen to have ceased to operate as an independent entity but to have become a tending subsidiary of the purchasing company, which, in turn, becomes the parent company of the subsidiary. (A holding below 50% could be sufficient to give

667-458: The first body) is a subsidiary of another body corporate if, and only if: Toronto-based lawyer Michael Finley has stated, "The emerging trend that has seen international plaintiffs permitted to proceed with claims against Canadian parent companies for the allegedly wrongful activity of their foreign subsidiaries means that the corporate veil is no longer a silver bullet to the heart of a plaintiff's case." The parent subsidiary company relationship

696-605: The five largest bank holding companies in the finance sector, as of December 2013 , based on total assets. The Public Utility Holding Company Act of 1935 caused many energy companies to divest their subsidiary businesses. Between 1938 and 1958 the number of holding companies declined from 216 to 18. An energy law passed in 2005 removed the 1935 requirements, and has led to mergers and holding company formation among power marketing and power brokering companies. In US broadcasting , many major media conglomerates have purchased smaller broadcasters outright, but have not changed

725-455: The following requirements are met: A parent company is a company that owns enough voting power in another firm (or subsidiary ) to control management and operations by influencing or electing its board of directors . The definition of a parent company differs from jurisdiction to jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction. When an existing company establishes

754-466: The shareholders. Also because, S corporation shareholders may only be individuals - not corporations. The dividends received deduction is limited with regard to the corporate shareholder's taxable income. Per §246(b) of the IRC, a corporation with the rights to a seventy percent dividends received deduction, can deduct the dividend amount only up to seventy percent of the corporation's taxable income. Furthermore,

783-491: The usual taxes on dividends, as they are legitimate and ordinary dividends to these shareholders. Sometimes, a company intended to be a pure holding company identifies itself as such by adding "Holding" or "Holdings" to its name. The parent company–subsidiary company relationship is defined by Part 1.2, Division 6, Section 46 of the Corporations Act 2001 (Cth) , which states: A body corporate (in this section called

812-562: Was created from the GEC's Power and Transport businesses (originally AEI (previously BTH and Metrovick) and English Electric) and the French Compagnie Générale d'Electricité (CGE). The merger was to enable both companies a gain a greater export potential into Europe. The GEC facilities in Rugby were split into GEC Alstom and Cegelec Projects, but in 1998 the two companies were reunited under

841-465: Was later sold to Cumulus Media ). In determining caps to prevent excessive concentration of media ownership , all of these are attributed to the parent company, as are leased stations , as a matter of broadcast regulation . In the United States, a personal holding company is defined in section 542 of the Internal Revenue Code . A corporation is a personal holding company if both of

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