A holding company is a type of business that primarily exists to own shares in other companies. It does not produce goods or services itself but instead controls other companies, known as subsidiaries. This structure allows the holding company to manage and oversee its subsidiaries while limiting its own liability. Holding companies can provide financial benefits, such as tax advantages and risk management. By owning multiple subsidiaries, a holding company can diversify its investments and reduce the impact of losses in any single business. This strategy is often used by large corporations and investment firms to streamline operations and enhance profitability.