Are you considering setting up a holding company to bring together several subsidiaries? A holding company, also known as a parent company, allows different companies to be brought together under a single structure and part of their management to be centralized.
This model can make it easier to manage a group, oversee financial operations, and carry out certain corporate reorganizations.
The two types of holding companies
It is recommended to prepare a detailed business plan in order to precisely define the role that the parent company will need to play.
Passive holding
The parent company primarily holds shares or interests in the other companies in the group, also known as subsidiaries.
Holding active
In addition to holding equity interests, the holding company can play an operational role and provide services to its subsidiaries, for example in treasury management or legal management.
The advantages of a holding company
Centralize group management
The different companies can be managed by the same management team, and financial operations can be centralized.
Centralize flows and taxation
The absence of double taxation in certain parent-subsidiary relationships, as well as the centralization of certain expenses and flows.
Reorganize an existing group
A holding company can be used when restructuring an existing group of companies to better organize the roles of its various subsidiaries.
Facilitate acquisitions
The holding company can also be used to structure the acquisition and financing of new companies.
Offshore company or holding company?
These two models are not necessarily in opposition. A holding company is a group centralization tool, whereas offshore responds to a different rationale and involves more limited activities.
An offshore company does not directly allow all the activities of a holding company, and its use is limited in particular to import-export, consulting, and investment activities.
A holding company and an offshore company can also coexist within the same organization. However, any financial arrangement must be approved by professionals.
Dubai, a destination of choice for a holding company?
The United Arab Emirates are an attractive jurisdiction for entrepreneurs and international groups, notably thanks to their economic stability, international reputation, and tax advantages.
For a holding company, a Free-zone structure is more suitable than an offshore company, as the latter does not directly permit holding company activities.
A Free-zone structure can offer a more comprehensive local presence while enabling the organization of relationships between the group’s various companies.
Get support to structure your holding company
Merritt supports entrepreneurs with establishing companies in Dubai and structuring international groups.
Professional guidance helps better organize the financial, tax, and legal operations of a holding company while complying with the applicable regulations.