Holding company advice
Protect your company now
You may have been advised to protect your assets in a holding company separately to your trading company. Alternatively, your business is growing in different sectors and you wish to protect those areas that are successful from those which may have an uncertain future, but of course will succeed. We can assist in setting up a structure that will protect your business going forward and anticipate the ebbs and flows of business. Often we are asked “how can these big companies have huge losses in one area and profits in another?” it is more likely the case that they all operate under the same umbrella of companies using the same trademarks and other aspects of the business structures under licence from holding companies. The intellectual property such as trade-marks, and real property such as premises etc, are protected in a simple legal entity which does not trade and has no other function but to protect the property for use throughout many other limited companies.
Whilst above we provide a relatively simplistic explanation as to how this is possible, it is also a very complicated area of law, requiring tax planning, structure planning, written contracts and shareholders agreements. Specialist legal advice should be sought to ensure the structure does what you intend it to do.
Key take away points:
- A holding company is a legal entity in it’s own right which can hold a controlling interest in other companies, sometimes known as group companies or subsidiary companies.
- The holding company can hold the assets of the group of companies and protect them any losses of the other companies.
- Holding companies are rarely trading companies so as to protect the assets held within them, the company will have controlling interests in the other group companies.
- If a subsidiary company falls into financial difficulties, gets wound up, goes into liquidation or becomes insolvent it does not affect the holding company.