As an experienced lawyer and specialist lawyer for corporate and commercial law In this blog I would like to give you valuable insights into the establishment of a holding company. Establishing a holding structure can offer strategic advantages for many companies, from tax benefits to improved corporate management. In this article I will explain the key steps and considerations to be taken into account when establishing a holding company, as well as the role of a specialist lawyer in this process.
What is a holding company?
A holding company is a company whose main purpose is to hold interests in other companies. It is a parent company that controls and manages subsidiaries. This structure allows companies to better organize and manage their activities and assets and to position themselves for future acquisitions. A holding structure can be set up as either a management holding company, an operational holding company or an organizational holding company, depending on the specific purpose of the holding company.
Advantages of a holding structure
Tax advantages
One of the biggest advantages of a holding company is the possible tax benefits. Profits distributed by subsidiaries to the parent company can be highly tax-privileged under certain conditions. Tax-relevant profit transfer agreements should also be considered here, which can also offer further advantages after appropriate advice from a tax expert. Tax experts should also be consulted for advice on savings on trade tax.
risk minimization
A holding structure can help minimize risk by spreading assets and business activities across different subsidiaries. This way, potential losses in one subsidiary cannot directly affect the others. The share in the subsidiary can be structured in such a way that the risk is optimally distributed.
In order to avoid liability risks, considerations for a holding structure must therefore take into account how operational risks can be legally separated from assets such as real estate and financial investments, which are always exposed to claims by creditors in a company without a holding structure.
Efficient administration
By centralizing administrative functions in the holding company, efficiency gains and cost savings can be achieved. The holding company can make strategic decisions that are then implemented in the subsidiaries. This is particularly advantageous for companies that have several business units or subsidiaries.
The process of establishing a holding company
planning and strategy
Establishing a holding company requires careful planning and strategy. It is important to define the company's long-term goals and choose the optimal structure that meets those goals. This applies to both new companies and existing companies that want to optimize their structure.
choose legal form
One of the first decisions when establishing a holding company is the choice of legal form. The most common forms are GmbH (limited liability company) and the AG (stock corporation). Each has its own advantages and disadvantages, which should be carefully considered. Many holding companies are founded as a holding GmbH, as this form offers a particularly high level of flexibility and protection of the company's assets.
founding of the holding company
The Articles of Association are the basic document of the holding GmbH, which sets out their internal rules and structures. The support of an experienced lawyer is essential to ensure that all legal requirements are met.
After the articles of association have been drawn up and the legal form has been chosen, the holding company must be registered and entered in the commercial register. This step is necessary to establish the legal existence of the holding company. Capital companies such as the Holding GmbH require careful registration in order to meet all legal requirements.
It is important to register the holding company for tax purposes in order to benefit from the tax advantages. This includes applying for a tax number and registering with the tax office.
implementation of the holding structure
At the same time, the implementation of the holding structure must be taken into account. The shares in the operating company that the shareholder previously held personally must be transferred or contributed to the holding GmbH in a tax-efficient manner. In particular, the regulations of the conversion law must be taken into account here, because tax benefits under the conversion tax law are linked to this. For example, the option of “spin-off with the simultaneous establishment of a holding GmbH for inclusion through a spin-off plan” must be taken into account. As a result, the holding company becomes the owner of the shares in the operating company when it is founded, and the previous shareholder “moves” to the level of the holding company.
Role of the lawyer in the establishment of a holding company
A specialist lawyer for corporate and commercial law plays a crucial role in the establishment of a holding company. He supports you in the planning, legal design, implementation of the necessary steps and, if necessary, coordinates the coordination with other experts, such as your tax office. In this way, he ensures that possible legal pitfalls are avoided and ensures that your holding company is on a secure legal footing right from the start.
Risk: Inadequate planning of the holding company establishment
Inadequate planning can lead to significant problems. It is important to define clear goals from the outset and develop a comprehensive strategy. For example, it is important to clarify how tax advantages can be best used or how the position of the managing directors can best be structured in terms of social security law. This can have a significant impact on the provisions in the partnership agreement, such as voting rights, veto rights or profit rights.
Compliance with all legal requirements is crucial to the success of your holding company. Make sure that all necessary documents are prepared and submitted correctly.
A holding structure can be complex and requires a high level of administration and control. This can be particularly challenging for smaller companies.
Establishing and managing a holding company can be costly. Establishing a holding company requires two sets of annual accounts: one for the operating company and one for the holding company
Conclusion
Establishing a holding company offers numerous advantages, but requires careful planning and legal advice. As a specialist lawyer for corporate and commercial law, I can help you choose the optimal structure and successfully implement all the necessary steps. Please feel free to contact me if you have any questions about establishing a holding company and let's find the best solution for your company together.
