Group of companies

economic-dictionary

A company group refers to a set of companies. This, when a company, which we call dominated, is under the control of another company, which we call dominant. Also, when they are neither dominant nor dominated, they present a structure that allows a joint line of action.

A group of companies, therefore, is nothing more than a group of companies. The fact that it receives this name is due to the fact that, as its name indicates, we are talking about a group of companies, a group of companies.

Usually, these societies revolve around one, the main one, and which we call dominant; the others being dominated. However, they may also not depend on each other, having only a structure that allows them to act jointly, as well as their comprehensive management as if it were a unit.

When we speak of a group of companies, this reminds us of the concepts "holding", "cartel" and "trust", so well known in the world of economics, as well as in the world of business.

These three concepts refer, like this one, to a group of companies. Only that these concepts define rather the performance of these companies, as well as the structure they present in terms of organization, rather than the union as such.

Likewise, we must know that these groups of companies, depending on the legislation, can be labeled as a group of companies, or they can receive another name. All this, as we will see below, varies depending on the country to which we refer.

Types of corporate groups

As we explained at the beginning, we must understand that there are two types of groups of companies:

  • Group of companies with a parent company: In cases where there is a parent company, the remaining companies are under the control of the parent company. This, through tools that are included in the law, as explained in the next section.
  • Group of allied companies: In these cases there is no parent company. Rather, unlike the previous case, in this case certain companies cooperate to, with common interests, achieve a proposed objective.

In both cases, we are talking about a group of companies. The difference is that, in the first case, we are talking about a company that has a clear dominance over others. While, in the second case, we are talking about a union of companies that have common objectives.

Characteristics of a group of companies

Among the main characteristics of this conglomerate of companies, the following should be highlighted:

  • It is a union of companies.
  • These can all be independent, or there is a central company that has control of the group.
  • If so, we will say that there is a dominant company, which dominates the rest of the companies, which we call dominated.
  • They have a common structure, and act as if it were a unit.
  • In cases where there is a dominant company, this is the one that gives the orders.
  • In the case of a union of independent companies, joint lines of action are established.
  • In this way, they can pursue common goals, as well as not overlap in their efforts.
  • In the case of a dominant company, this type of business union can be used for different purposes. Among them, irregularities and the informal economy.
  • In the other case, we are talking about a union of companies that is expected to achieve a certain purpose, for which they were unified.
  • In summary, and in both cases, it is a union of companies, where there are several companies; being able to exist a domain of one, or not, between them.

Group of companies in Spain

In Spain, a group of companies occurs in a situation in which one company, which we call the dominant company, has control of other companies that depend directly on it.

In other words, the group of companies in Spain is a concept that refers to legislation. This establishes that we speak of this concept when, when analyzing the composition of the group of companies, they present a dominant company that controls the rest.

In this way, Spanish legislation establishes the following conditions in the Commercial Code for it to be considered:

  • The company must own the majority of the voting rights.
  • That the company has the power to appoint, or remove, the majority of the board of directors.
  • May have, in some way, a majority of the votes.
  • When the majority of the board of directors is made up of members of the board of directors, or senior managers, of the dominant company. In addition, provided that they have been appointed with the votes that the dominant company has in the last 2 years, and they perform their position when the consolidated accounts of the company are presented.

In addition to those mentioned, there are other cases in which, in the same way, such power would be considered.

Likewise, it should be noted that the Government of Spain, through this control, is in charge of, together with the competent authorities, supervising the market power of these companies, as well as the actions carried out. All this, in order to avoid irregularities usually practiced through this type of figures.

Therefore, a company that, according to the Commercial Code, is classified as a group of companies, will have to comply with the requirements established by this same code, as well as other types of laws that, in the same way, regulate this type of business groups. Among these requirements, there is also a special taxation, which will depend on the degree of control, as well as other aspects, including the volume of shares held by the dominant companies.

Example of a group of companies

A clear example of a group of companies can be a company that manufactures cars, but which, in the same way, is the majority shareholder of another series of companies that manufacture accessories, as well as all the parts and components that make up the vehicle.

Another example could be a company that manufactures mobile phones, but as in the previous example, it is the majority shareholder of other electronic components and accessories companies that are used for the phone models offered by the former.

These two examples are a sample of a group of companies in which there is a dominant company. However, let's look at other examples in which this dominant company does not exist, and therefore there are no dominated companies either.

Thus, a clear example could be a group of pharmaceutical companies. Which, with the intention of joining forces and investigating the same field, develop a common strategy, and come together to achieve an objective that all of them pursue, and that will be achieved sooner if it is done together.

Another clear example could be that of the pharmaceutical companies in Spain. All of them joined in cooperatives, which control the logistics of medicines, the management of competition between pharmacies, as well as other aspects related to the operation of the business. All this, in order to grow together, and in an order that allows the optimal development of this type of business.

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