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Holding Company

A holding company, sometimes called a parent company, owns sufficient stock (often as little as 10 to 15 percent) of another company to control its board of directors and govern that company`s direction. That form of corporate control was first used in New Jersey in 1889 in the wake of criticisms of the earlier trust form of organization. The Theodore Roosevelt administration brought suit against the Northern Securities Company, a railroad holding company in 1902. Two years later, the Supreme Court ordered the dissolution of NSC, causing a slowdown in the use of this form of corporate control.