When you hear the term Holding Company or HoldCo, your mind tends to associate that term with large corporations registered offshore, with multiple subsidiaries all over the world, but this is not necessarily the case. A Holding Company structure can be implemented irrespective of your business’s size and the industry you operate in.
In simple terms, a Holding Company is a single-parent company structure that owns a controlling interest in several companies that are incorporated under the Holding Company’s name. These companies are known as subsidiaries.
The Holding Company has the ability to control the affairs of its subsidiaries from a corporate governance, management and policy point of view. The Holding Company, as the parent company, also owns and/or has a beneficial interest in the assets the subsidiaries own, such as real estate, stock, bonds, intellectual property and shares, just to name a few.
A Holding Company is generally not in the business of rendering goods or service in its own right and does not get involved in the subsidiaries’ day-to-day running. However, the Holding Company understands the business of its subsidiaries and how to determine and evaluate whether the subsidiaries are performing or not.
The advantages of incorporating a Holding Company structure are –
- The sharing or pooling of assets and skills;
- Limiting risk and liability protection;
- Tax advantages;
- Controlling more assets for less money; and
- Flexibility for development and growth.
Implementing a Holding Company structure can provide some real advantages for your business. If you are considering a structure like this, please do not hesitate to contact BBP Law Attorneys. We will gladly arrange a meeting to provide you with more information on the advantages and how best to leverage this structure to meet your business needs and objectives.