Corporate Governance and Organization of Holding Companies Lessons for Governing the National Olympic Committee

They are beneficial especially to the owners because they guarantee some risk reduction that allows the ownership and control of the company to be vested in people with no direct influence on the way goods and services are produced in. As a matter of principle in the U.S, under the law, 80% of the stock, both in value and voting, must be owned before any consolidations on the tax benefits can be claimed (Wheelen and Hunger 95). The holding company will represent most of the assets owned by the company either in the form of stocks, limited liability companies, private equity funds, hedge funds, bonds, real estates and trademarks amongst other assets. In the wake of the many corporate fiascos going on in the nation, corporate governance, organization and structure have become core concerns in different sectors (Holderness 49). Many believe that the Holding companies have the best structures that should be emulated by other organizations. The National Olympic Committee needs some organizing based on the best practices in the corporate world. The crux of this report will dwell mainly on the importance of having a holding company’s structural, organizational and governance criteria in governing the NOC. LITERATURE REVIEW
It is necessary to acknowledge that the holding company and the other company that they control have a parent-subsidiary relationship. If the holding company owns all the voting and value stocks, the relationship becomes a wholly-owned subsidiary of the parent company. A company is thus considered to be purely a holding company if its existence is to primarily own voting stocks and not to engage in any operations separate from its subsidiaries. Otherwise, it will be considered a mixed holding company or a holding-operating company. In the case where a subsidiary operates in unrelated line of business from its major scope, the holding companies are referred to as conglomerates (Wheelen and Hunger 95-7). The main form of management perspective presented by these relationships is that of a decentralized management. Every company retains its managerial team with the subsidiary companies becoming responsible to the parent company on a profit-loss basis. They are also allowed to retain their identity with the parent company becoming a beneficiary of any goodwill or recognition whatsoever that comes with the subsidiary’s name (Holderness 51. Wheelen and Hunger 100). The organizational structure, herein defined as the formalized and arranged interaction between the companies’ responsibilities for the tasks and resources within the organization, may differ from the mainstream organizational structures precedent in several organizations. Any functional organizational structure deals with the separation and autonomy of the functional groupings within the organization that are divided mainly along the tasks, people and technologies present (Hayes, Mehran and Schaefer 12). The most salient attribute for these to operate is a functional procedure that ensures the coordination and integration of these attributes. This leads to the required activities that enhance the provision of the businesses’ products and services. As a holding company, the aim of the structural attributes is to act mainly as a financial overseer rather than a management entity. Most companies have adopted the company-with-committee system of management where the executive officers are tasked by the Board of Governors on the running and execution of every day activities (Adams and Mehran 124). The content of the execution process by these subsidiary companies is subject to the oversight of the Board of Gove