As you are probably aware, there are a few different types of business ownership structures in the UK. One of the types of businesses is holding companies. A company like this is focused on investments, assets, and management unlike most of the other types of businesses that are focused on producing/providing services and products. What is a holding company is a common question today because this is not the most used type of business. A holding company has shares which limit its operations. The main objectives of the company are achieved with the help of assets which are part of other companies or a single company. These assets include a wide range of financial products like intellectual property, shares or real property.
What is a holding company from a legal point of view?
There are a few requirements that a company must meet in order to become a holding company. All of them are related to the parent company. So, if the parent company has over 50% of the voting rights associated with the subsidiary, it can be considered to be a holding company. In addition, in case the parent company is part of the subsidiary and it can remove or appoint more than half of the board of directors, this is, in fact, a holding company. Finally, in case the parent company is part of the subsidiary and has control of the majority of the voting rights in the same subsidiary as part of an agreement with all the shareholders.
Holding companies and the process of registration
There are not many differences between registering a holding company and registering any other type of private company with shares limitations. So, a company of this kind must be incorporated at Companies House and follow the filing rules and regulations. This is not a very complex process, but it’s always a smart move to hire a company formation service provider to do this job for you.
Regardless of the method registration, you want to use, you should be prepared to fill out a form which will include some basic information. A registered office address, a company name, shareholders’ details, SIC (Standard Industrial Classification) codes, details about the share capital, articles of association and memorandum of association, directors’ details and info about individuals with significant control. In addition, if there are any sensitive words in the company name, you should provide supporting documentation that will show that you can use these words. It takes just a few days to finish this process if everything is alright.
Holding companies and taxes
The chance to save on taxes is one of the most important reasons why so many people are interested in holding company formation. The majority of dividend payments and share disposals are free of tax. A company of this type can expect TAX emption from Value Added Tax taxable supplies in case its main activities are the acquisition of shares in different subsidiaries, protecting itself from takeovers, getting dividend payments from shareholdings, and simple disposal of shareholdings in subsidiaries.
Now that you have an answer to the popular question “What is a holding company” it is time to use a company formation service provider.