Define: Cross Shareholding

Cross shareholding is a practice where two or more companies hold shares in each other, creating a mutual ownership relationship.

Cross shareholding is generally legal, but it can raise antitrust concerns if it leads to a lack of competition in the market.

Cross shareholding can create a stable business relationship between companies, provide access to capital, and facilitate strategic partnerships.

Cross shareholding can lead to conflicts of interest, reduced competition, and potential market manipulation.

Cross shareholding can influence decision-making and voting rights within companies, potentially leading to a lack of independence in corporate governance.

Many jurisdictions have regulations governing cross shareholding to prevent anti-competitive behaviour and ensure transparency in corporate ownership.

Cross shareholding can dilute the influence of minority shareholders and limit their ability to influence corporate decisions.

Companies may be required to disclose their cross shareholding arrangements in their financial statements and regulatory filings.

Cross shareholding can be used as a takeover defence by making it more difficult for an outside entity to acquire a controlling interest in a company.