Which of the following represent disadvantages of a holding company structure?
A) Potential for triple taxation
B) Significant number of minority shareholders may create contentious environment
C) Managers may have difficulty in making the best investment decisions
D) A, B, and C
E) A and C only

Question

Quizplus · Accepted Answer

A holding company structure can lead to potential triple taxation, where the subsidiary's profits are taxed at the corporate level, dividends from the subsidiary are taxed again at the holding company level, and then individual shareholders are taxed on the dividends received from the holding company. Additionally, if the holding company has a significant number of minority shareholders, it may lead to a contentious environment as they may not have a say in management decisions. Finally, with multiple subsidiaries and diverse investments, it can be challenging for the holding company managers to make the best investment decisions.

Which of the Following Represent Disadvantages of a Holding Company