We frequently recommend one of the advantages of making a group structure through the use of a holding company. This is a conversation that we frequently have with customers, plus predominantly now during the current financial environment. But what precisely does this mean and what are the key benefits of setting up company?
Setting up holding company is a separate parent company created to own a controlling interest in a subsidiary company or else companies. A holding company doesn’t essentially trade itself; its major purpose is to form a corporate group.
A holding company is fundamentally a parent corporation that owns a controlling interest in a supplementary company.
Setting up holding company is frequently inactive in terms of trading, but sometimes they will trade themselves. Even though the terms holding company plus parent company are frequently used interchangeably, the latter usually implies a more vigorous trading role than the former.
Organisational structure – Bringing together unlike companies, which can be valuable when acquiring other companies or making several business ventures, for example Google created a holding company known as Alphabet Inc. in 2015. In this situation, a holding company can make the generally business structure clearer, which may assist with investment.
Where setting up company holds the precious assets and is an entity separate from the operating companies, the danger of losing those assets is minimised if the operating company executes badly or else becomes bankrupt.
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