Considering largest enterprises in the CIS and the European space, it can be revealed that the majority of them are owned by foreign investors. Simultaneously, bulk of such organizations are located in Luxembourg, Holland, Switzerland, and also in Cyprus. This means that for certain reasons, at some stages of fulfilling commercial activities, the owners of large enterprises change business structuring and create holding – model that combines management chains into one general structure.
What is alternative business structure: holding concept
Holding is a type of business structure – vertical consolidation of legal entities that includes a maternal enterprise and subsidiaries. Maternal organization controls subsidiaries operation and controls their shares. The holding is usually not engaged in trade, services or production. The main task of the holding structure is assets ownership and management. But in certain European countries, it is possible to combine the work of the holding and trading purposes, however, from the point of view of security and asset protection, this direction of mercantil implementation isn’t recommended.
Purpose of merging firms into a single holding
The main tasks of holding business structuring are:
- profits accumulation in state with smallest taxes;
- possession of corporate rights of other enterprises, real estate, valuable documents;
- firms’ protection company from external encroachments;
- high level of investor security;
- financing of the constituent parts of the holding;
- owning intellectual rights and receiving royalties;
- reduction of tax rates when selling part of the business to other investors;
- taking loans and raising money outside jurisdiction to invest in similar projects;
- organization of a unified management system.
Holding location
When choosing jurisdiction where holding organization will be registered, it is necessary to take into account the tax treaties that exist in the countries. The choice of most profitable international treaty is called the purchase of treaties.
It is important that there’s simply no better jurisdiction for business processes. But, by analyzing firm’s goals, you can select most suitable place to set a holding. Often, European states are perfectly suited for holdings. Now most often holdings are registered in Holland, Switzerland, Luxembourg, Liechtenstein and Denmark. Virtually all of these states possess strong protective laws and stable banking system.
Structured business to protect assets
Holding basis is a special trust mechanism, organized in a state with well-developed protective laws. The rule of connection of jurisdictions is the main law of commercial consolidation. Legal support during holding creation consists of many steps.
- At the start, a legal analysis of the current position of the group, identification and resistance to risks is carried out.
- Next, the company’s specialists create a strategy for corporate ownership, management, commodity-financial flows and the economy.
- Then you need to create a business plan.
Before changing structure of business, it’s important to evidently think through the goals and identify all the tasks. This will enable you and the specialists of our firm to properly structure the holding.
Before planning the process, it is important to understand what kind of structure you want, what types of activities will generate profit, what you will focus on in your work, who will be the owner of the holding, etc. Analysis of the current situation is the main step in commercial planning.
If you intend to buy a business, contact us for thorough advice on structuring. Our company always takes into account the rules of combining jurisdictions, choosing only the best from each country. We will help to make a step-by-step restructuring of firm and establish strong holding. Our experts prepare a legal opinion; it’ll indicate the ownership model and management structure of commercial projects. Activities list needed to create a holding will have a schedule and a phased plan for their implementation. In addition, we are also ready to offer you many options for ready-made companies for sale.
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