What is the difference between a holding company and a subsidiary company?

A holding company is an entity that owns a controlling interest in one or more other companies, known as subsidiary companies, but typically does not engage in their day-to-day operations. In contrast, a subsidiary company operates independently but is majority-owned by the holding company, which provides strategic direction and financial support. Essentially, the holding company serves as an umbrella organization, while the subsidiary is an operational entity under its control. This structure allows for risk management and diversification of investments.