If you are an investor looking to diversify your portfolio, you may encounter
‘investment holding companies’ on the market— what exactly are they?
Whether you are a beginner investor looking for an investment platform or an experienced
investor looking to diversify your portfolio, you may encounter something known as an
investment holding company. By legal definition, an investment holding company is specifically
established to hold investments. Well, it is already in the name, and it does sound a little bit … too
straightforward. The question is, what exactly is an ‘investment holding company’, and how are
they different from conventional companies?
What Is An Investment Holding Company (IHC)?
An investment holding company in Malaysia is established with the sole purpose of managing the
assets and investments of other companies. These companies do not offer tangible services or
produce goods of their own. IHCs generate income and profit from owning long-term
investments such as properties and shares. The income sources of IHCs are mainly rent, annuity,
dividend, interest, and are classified as non-business income under the Income Tax Act (“ITA”)
How do I know if a company is an Investment Holding Company (IHC)?
IHCs in Malaysia can enter business activities related to the real estate sector, and it is allowed to
rent properties and provide maintenance and support services related to the respective property.
A company must fulfil these 2 criteria if it is an investment holding company:
1. Its primary business activity is managing assets and holding investments in securities,
stocks, loans, properties and more.
2. 80% or more of the company’s gross income must be from a source of a business holding
What are the benefits of using an Investment Holding Company to invest in properties?
Most investors utilise IHCs as an alternative vehicle in property investment due to their benefits:
1. Risk Management: In joint property ownerships, IHCs play the role of a ‘mediator’ to
safeguard your investments. IHCs simplify legal proceedings and avoid bureaucratic
processes about inheritance and property ownership.
2. Proportional share of finances: Traditional joint ownerships give two parties equal say
regardless of their share of investments. However, IHCs provide investors with a larger
investment amount more control in decision making.
* * *
Malaysian National Reinsurance Berhad (MNRB) was established in 1972 to reduce the outflow of
reinsurance premiums overseas. In 2005, the MNRB Group underwent a company restructuring
to become an investment holding company and changed its name to MNRB Holdings Berhad
(MNRB). Today, MNRB is listed on the Bursa Malaysia. The MNRB Group comprises leading
wholesale reinsurance and retakaful providers and two takaful operators. Head over to
https://www.mnrb.com.my/investor-relations for MNRB’s financial performance as an investment