You will also need to draw up and file a specific memorandum of association registering your intentions and agree on your articles of association, which are your holding company's own internal rules and regulations. You will need to supply addresses for your limited company officers, and details of your shareholders.
All this paperwork can be time consuming, and Companies House can sometimes be slow to respond, particularly if you make your application by post. Every document must be presented on the correct form in the correct format or it could be rejected, delaying your private company registration even more. Coddan can help you to cut through all the red tape with a simple holding company start-up service which can be based on the details you supply, or even register a holding company using nominee director, we can provide to speed up the process. Whether you've already made all your key decisions, or prefer to leave them until after holding company incorporation, we can offer you a straightforward online service that could take just hours.
Uses for a holding company in business
Coddan can arrange for holding companies to be set up, and there a number of reasons for this type of company startup - most of these relate to taxation, commercial and legal reasons. When considering the use of a holding company, it is important to seek advice from experts with more than 20 years of experience in this field, and Coddan makes the whole process straightforward through our website. We handle the completion and filing of the necessary documents with Companies House and HMRC, and this ensures that all of the formalities are completed legally and accurately.
From a taxation perspective, forming a holding company allows access to various forms of tax relief. There are many different ways to make a holding company tax efficient, and Coddan has access to highly-skilled accountants and advisors who will be able to make the most of your investment in the creation of a holding company.
In particular, this type of arrangement can benefit businesses that receive dividends from foreign subsidiaries, and there are other benefits for companies with international activities. The public conscious is very much focused upon corporate tax affairs at the moment, and Coddan can make sure that all arrangements comply with complex legislation.
Commercially, a holding company allows a business to have a correspondence address that is separate from their main operating premises. An inspection or similar type of visit to view paperwork can be disruptive in a busy working environment, and a holding company can have a distinct domiciled office address for the storage of records. A holding company can also deal with incoming communications in a pre-defined location.
When naming individuals that are in charge of a holding company, it may not be beneficial to name the true business owners in Companies House records. An element of the holding company registration process is that a nominee can be selected for legal reasons, while full control is retained by the real owner with legal documentation in place for this purpose. If the real owners of a commercial enterprise need to remain anonymous, a holding company start-up is a possible solution.
Holding companies and subsidiaries: if company A owns more than 40 per cent of the issued shares of company B, it is clear that A is B's holding company, and B is therefore a subsidiary of A. However, the definition of "subsidiary" and "holding company" in the Companies Act goes beyond that simple example and covers a number of other situations. B will be a subsidiary of A if: -
Other key points include: -
A company with more than one trading activity has the choice of carrying on all its trades under the umbrella of one company, or splitting them between a numbers of trading subsidiaries. Its decision will probably depend on the factors below.
Risk mitigation – having a number of companies in the group, each with the benefits of limited liability, can be advantage. If one subsidiary gets into financial difficulties, there is nothing in law that obliges its parent to continue supporting it, unless it has guaranteed the subsidiary's liabilities or otherwise agreed to help.
Tax – as a general rule, whatever trading structure is used, the effect should be tax neutral, but there are numerous examples where some advantages or disadvantages, can arise from keeping separate activities in separate subsidiaries or, conversely, from lumping them together in one company. Some tax reliefs may depend on whether there is a 51 per cent or 75 per cent relationship with the group companies involved.
Administration – the more companies you have, the greater the administration burden the greater the cost and more paper is generated.
Complexity – there can also be a conflict between the way a court will look at a group of companies, and the everyday practicalities of running at a group: the court will see a number of distinct legal entities, each with its own legal rights and obligations; the executives running the group may view the lot as one business with reporting lines and managerial responsibilities crossing those legal boundaries. Superimposing a different management structure on an existing corporate group structure can cause problems if those boundaries are not respected.
In addition to its definitions of subsidiary and holding company, the Companies Act introduces definitions of "subsidiary undertaking", and "parent undertaking". These are wider definitions used in accounting and encompass not only ordinary subsidiaries and holding companies but also other situations where there is effective control and the accounts or two or more companies should be consolidated. They can also include entities other than companies – such as partnerships and unincorporated associations.
