Chapter 4 - Complex Corporate Structures The Governance of...

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Complex Corporate Structures The Governance of Complex Corporate Structures Three Broad Categories: Pyramids – holding company sits on the top of a pyramid of subsidiary and associate companies Chains – in which one company or shareholder group holds an interest in a string of companies Networks – in which a set of companies owns shares in each other Three definitions to remember: Holding company Subsidiary company Associate company The Governance of Pyramid Structures Why pyramid structure? Strategic positioning – Bound identifiable parts of the enterprise in line with the groups corporate strategy Legal – simplifies legal and regulatory aspects Taxation Limiting liability – creating separate entities to reduce the group’s exposure to the debts of any member company - Each company in a group must obey legal requirements of the jurisdiction in which it is incorporated - Each subsidiary and associate company must have its own officers and board The Governance of Chain Structure - Can be distinguished from the pyramid structure since it has other outside shareholders
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Chapter 4 - Complex Corporate Structures The Governance of...

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