In simple terms: an operating company does things, while a holding company owns things. Operating Company: This is a company that is actively engaged in business operations. It conducts day-to-day activities, generates revenue, and holds assets and liabilities associated with its core operations. It may manufacture products, offer services, and employ staff. Holding Company: This is a company whose primary purpose is to own and control investments in other companies. It does not engage in active business operations but instead holds and manages assets in the form of shares, real estate, intellectual property, or other investments. — Example: The holding company, which owns a subsidiary company, will act as the shareholder of that particular operating company.