A holding company is a company that does not produce goods or services itself, rather it exists to own shares of other companies. Holding companies can the reduce risk for their owners by inserting another corporate layer in between them and the operating companies and can allow the ownership and control of a number of different companies. A holding company does not really increase risk, but implementing one will increase the level of overall administration and reporting complexity. In certain situations, if enough ownership of the subsidiary is held by the parent company, it may be possible to have certain tax advantages in the movement of funds via inter-corporate dividends and other means.

In order to obtain a detailed understanding of the pros and cons of implementing a holding company structure, you may wish to consult a CPA.