A Holding Company is a Company that holds the shares within other companies, acting as branches or subsidiaries which has a specific purpose. The Holding Company will not trade with the subsidiaries, but rather act as a central facilitator – which holds shares on behalf of main shareholders within the group. As per the picture below, the Holding Company will own shares in Subsidiary A and other Companies which could be opened as it grows.
Note the date of the transactions upon which the Holding Company is acquiring the shares within the structure. (pre-registered companies are available for earlier dates) as this will have an influence on your tax structure as well.
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The Holding Company Structure simplifies the growth phase of a Company. Here follows three growth facets for which a Holding Company Structure works best, using the structure of Imperial Logistics as an example.
If a Company wants to expand operations into (a) more industries; or (b) more countries – it can easily do so by adding more Subsidiaries to its Holding Structure which has its own Name, Risks and Bank Account. The shareholder and Director in these new Companies would be the Holding Company. Imperial Logistics expanded with Snyman Transport in Africa; and with Kenam into Specialised Freight.
Should a Company want to expand with a new business with a new partner, it is simple to add a Subsidiary in a Holding Structure. In this case the new partner(s) will own shares and have Directorship in the new company. Imperial Logistics could easily expand with Imperial Air Cargo in a unknown industry, by giving Directorship and 50% shares a trusted partners with expertise in Air Freight.
Should the Holding Company become large and the shareholding or Directorship changes, these changes does not have to happen at each Subsidiary Company. If Imperial Logistics ‘Holding’ decides to hire a new Director and add 5 new shareholders, these changes will automatically pull through to its 28 Subsidiaries.
We need to Register a Company as the holding company and appoint the main directors and shareholders.
From there we will Register the other Subsidiaries and setup the shareholding within each Company in the group. Through this process we will include 100% shareholding to the Holding Company (Wholly or partially).
We then appoint the representative directors within each entity (each separate company within the group) as required for the specific roles.