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Can a company A hold 100% of shares in company B and can this company B have 100% of shares in company A

I couldn't find any information that dissolve this activity.

3

If this happens, the pair of companies is worthless and might as well not exist.

Proof 1:

  • No shares of either company are owned, directly or transitively, by any natural person (human). The ownership chain bounces back and forth endlessly between A and B.
  • There is no way for the companies to do anything, because there is no way to legally exercise control or make decisions, which can only be done (directly or transitively) by human owners.

Proof 2:

  • Call "external assets" the net assets other than shares of A or B themselves.
  • A owns 100% of B, so Value of A = External assets of A + Value of B.
  • B owns 100% of A, so Value of B = External assets of B + Value of A.
  • By adding the two equations above, External assets of A + External assets of B = 0.
  • So A and B do not own any net external assets.
  • No value can be created by making the two companies own each other, so the construct is an empty shell.
  • 1
    ad 1: The CxO people don't have to be identical to the owners. But with your #2, you make a point. – glglgl Oct 1 at 16:39
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    I agree it makes no sense, but what is actually preventing it from happening? – DJClayworth Oct 1 at 17:03
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    As formulated by OP I agree there can be no value, but is P1.1 necessarily true? Could a company somehow come to be owned by nobody, but still have holdings an e.g. a board of directors that maximized shareholder (the company) value? I can't think of a way it would actually come to be, even if it were theoretically possible though. – John K Oct 1 at 18:30
  • @JohnK If either corporation held assets which included an ASI, then this could be a means by which it "freed" itself from being owned. – Michael Oct 1 at 23:15
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    Also, I disagree on your math... either External assets of A or External assets of B or both could demonstrably be > 0, which actually leads to the value of A and B diverging. – Michael Oct 1 at 23:18

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