Published by Bloomberg in October 2025, the chart to the right shows how investments and bilateral software and hardware deals form a circular structure underpinning the AI economy today. Since, we at T-rank “speak & understand” circularity, we want to comment on the challenge of circular ownership:
Corporate ownership is often complex and intricate, but few structures present as many challenges to transparency and clarity as cross-ownership and circular ownership. While often used interchangeably, both terms describe scenarios where entities hold stakes in one another. Cross-ownership typically refers to a two-way reciprocal holding. Circular ownership is an extension of this, forming a closed loop. These structures are prevalent globally and are crucial to tackle for anyone who wants to understand corporate control.
The primary issue arising from cross-ownership and circular ownership is a profound lack of clarity. These complex ownership structures naturally obscure the true financial and controlling relationships within a group of companies. The complexity can be a by-product of historical investment decisions, or it can be deliberately used to hide liabilities, consolidate control with minimal capital outlay, or skirt regulatory ownership limits.
In Japan, the phenomenon of circular ownership has indeed its own label: keiretsu. A keiretsu is a network of companies built on reciprocal shareholding and long-term relationships. Similarly, the Korean chaebols are family-controlled industrial conglomerates. Benefits emerging from these circular structures can be reciprocal monitoring, risk reduction, mutual assistance, and stable financing.
Then you may ask: How big is this issue? Peeking into our database, we have counted up two things for each territory across the world: How many Entities with owners exist for a given territory, and how many of these Entities contain a circular ownership structure. Given that these two numbers vary with orders of magnitude across territories, we take the logarithm of the values and then transform them to the same relative footing. The result is the scatter plot to the right.
In the scatter plot, we have the number of Entities on the x-axis, and on the y-axis you’ll find the number of Entities with circular ownership. Each colored disc in the scatter plot represents one territory, and the different colors encode different regions in the World; EMEA (Europe, the Middle East and Africa), NA (North America), LATAM (Latin America), and APAC (Asia-Pacific). The main thing that stands out is that there is a clear growing trend. This tells us that with increasing numbers of Entities there will be an accompanying growth in the number of Entities containing circular ownerships. We can also mention that the share of Entities having circular ownership to the Entities with owners, is as large as 5% for some territories; so this is a significant and growing issue.
The top 10-list of territories containing the most Entities with circular ownership is:
Regardless of the intentions behind the circular ownership structures, the lines of control are obscured by these arrangements. When corporate entities own shares in each other, the critical question becomes: which individual, or “natural person,” ultimately exercises decisive influence or control over the structure?
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Written by Kenth Engø-Monsen – kenth (at) trank (dot) no