Register a Holding Company

How does a Holding Company work in South Africa?

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.

For more info on Holding Company Registration, view some of the main questions most business owners ask below.

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.

(1) New developments

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.

(2) Partnerships  

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.

(3) Changes

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.

(1) Register the Holding Company

We need to Register a Company as the holding company and appoint the main directors and shareholders.

(2) Shareholding of the Holding Company

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).

(3) Assigning Roles

We then appoint the representative directors within each entity (each separate company within the group) as required for the specific roles.

The main reasons that business owners consider creating a holding company are to protect assets, reap tax benefits and have control or influence over other companies. Businesses owned entirely by holding companies can all be filed under the same tax return, saving time and money.

Holding companies can be grouped into sub-groups, such as medical devices, consumer health care, or pharmaceuticals. However, each holding represents a lone company that can be operated by employees with offices, facilities, etc.