{"id":173443,"date":"2022-08-04T03:23:35","date_gmt":"2022-08-04T02:23:35","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=173443"},"modified":"2022-08-04T03:23:36","modified_gmt":"2022-08-04T02:23:36","slug":"holding-company","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/business-structures\/holding-company\/","title":{"rendered":"What is a Holding Company in England?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Understanding different corporate structures can be valuable if your company is either looking to create its own subsidiaries or incorporate your business into a large corporation. Holding companies (sometimes called <\/span><a href=\"https:\/\/legalvision.co.uk\/business-structures\/parent-company\/\"><span style=\"font-weight: 400;\">parent companies<\/span><\/a><span style=\"font-weight: 400;\">) is one way a business can form a corporate group. Typically, holding companies do not produce a good or service as part of their general operations. Instead, they exist to control stock in subsidiaries, and using one can be beneficial for several reasons. This article will explain what a holding company is and discuss some benefits of using this corporate structure.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is a Holding Company?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A <\/span><a href=\"https:\/\/legalvision.co.uk\/business-structures\/purpose-holding-company\/\"><span style=\"font-weight: 400;\">holding company<\/span><\/a><span style=\"font-weight: 400;\"> is usually a corporation or a limited liability company with a controlling interest in several subsidiary companies. A subsidiary company is a business that is owned by a holding company. An example is Google, who are a subsidiary to Alphabet, a parent company.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A business that is completely owned by its parent company is referred to as a &#8216;wholly owned subsidiary&#8217;. Large corporations will usually have a portfolio of companies that it owns with varying degrees of interest.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A holding company usually will not (but not always) offer a product or service to customers, but it will sometimes have assets and legal liabilities. They can also get involved in management decisions of individual subsidiaries by using their <\/span><a href=\"https:\/\/legalvision.co.uk\/corporations\/classes-company-shares\/\"><span style=\"font-weight: 400;\">voting rights<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Legal Classification<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Under the <\/span><i><span style=\"font-weight: 400;\">Companies Act 2006<\/span><\/i><span style=\"font-weight: 400;\">, a company is a subsidiary of a holding company if:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">it has a majority of the voting rights; or<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the company has the power to appoint or remove a majority of its board of directors,<\/span><\/li>\n<\/ul>\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400;\">Notably, meeting the legal definition of a subsidiary and holding company will have legal implications, including potential tax benefits.\u00a0<\/span><\/p>\n<\/div>\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div 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Where the company&#8217;s operations are completely different from subsidiary operations, the company may be referred to as a conglomerate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Further, an <\/span><b>immediate holding company<\/b><span style=\"font-weight: 400;\"> is one that is a subsidiary of another holding company. These companies have controlling shares in a subsidiary, but they themselves are also owned by another company.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Benefits of Using a Holding Company<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The next section outlines three key benefits of this <\/span><a href=\"https:\/\/legalvision.co.uk\/business-structures\/advantages-holding-company\/\"><span style=\"font-weight: 400;\">corporate group<\/span><\/a> structure<span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">1. Risk Management<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">One benefit of this corporate structure is effective risk management. Since subsidiary companies are not legally co-dependent in a corporate group, there is less risk to each subsidiary if one of them starts to fail financially. Instead of the whole company becoming insolvent, the individual subsidiary would become insolvent. This helps to manage risk for legal liabilities across the whole group.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">2. Tax Benefits<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">There can be a number of tax benefits to using this corporate structure. For example, dividends can pass between the corporate structure without incurring tax. They can also benefit from tax exemptions. For example, when a company sells less than 10% of shares in another company that it owns, it will usually not have to pay tax on its gains.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">3. Shared Costs<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Subsidiaries can save on costs for certain aspects of their operations, such as administrative and central service functions. However, the extent of shared costs between operating companies and the holding company will depend on the nature of the businesses.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In some cases, you could have competition law concerns that raise the attention of the <\/span><a href=\"https:\/\/www.gov.uk\/government\/organisations\/competition-and-markets-authority\"><span style=\"font-weight: 400;\">Competition Markets Authority<\/span><\/a><span style=\"font-weight: 400;\">. As a result, if you are looking to set up a new company with the view of acquiring subsidiaries, it is important that you seek professional legal advice on regulatory concerns from an early stage.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Key Takeaways<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As a business, it is useful to understand the benefits of using a corporate group structure. This will typically involve a holding company with majority control over subsidiaries. <\/span><span style=\"font-weight: 400;\">Holding companies are often set up for the sole purpose of owning subsidiary companies rather than providing their own services. However, holding-operational companies may perform their own operations in some way. Further, using holding companies can offer many benefits, such as liability management, tax benefits, and shared costs for certain administrative functions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you need help organising your corporate group structure, our experienced <\/span><a href=\"https:\/\/legalvision.co.uk\/business-lawyers-lp\"><span style=\"font-weight: 400;\">business lawyers<\/span><\/a><span style=\"font-weight: 400;\"> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our <\/span><a href=\"https:\/\/legalvision.co.uk\/membership\/\"><span style=\"font-weight: 400;\">membership page<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Frequently Asked Questions<\/span><\/h2>\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1659579271133\"><strong class=\"schema-faq-question\"><strong>What is a holding company?<\/strong><\/strong> <p class=\"schema-faq-answer\">A company that owns a controlling share in other companies, usually referred to as subsidiaries.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1659579283654\"><strong class=\"schema-faq-question\"><strong>What is a subsidiary company?<\/strong><\/strong> <p class=\"schema-faq-answer\">A subsidiary company is a company that is owned by a holding or parent company.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Understanding different corporate structures can be valuable if your company is either looking to create its own subsidiaries or incorporate your business into a large corporation. Holding companies (sometimes called parent companies) is one way a business can form a corporate group. Typically, holding companies do not produce a good or service as part of<a href=\"https:\/\/legalvision.co.uk\/business-structures\/holding-company\/\">Continue reading <span class=\"sr-only\">&#8220;What is a Holding Company in England?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13325,"featured_media":3118,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1455,172091,1193,4396,4641,2159","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[36],"tags":[21,223,345,346,922],"class_list":["post-173443","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-structures","tag-medium-business","tag-large-business","tag-holding-company","tag-parent-company","tag-corporate-group"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is a Holding Company in England? 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