Holding
Definition
A holding company is a corporate entity whose primary activity is to own interests in one or more other companies. It may also hold other types of assets, such as real estate or financial investments, depending on its objectives and the purpose defined in its articles of association.
In Private Banking, a holding company is often used as a tool for business structuring, wealth organization, and succession planning. It can help organize asset ownership, consolidate shareholdings, centralize family or shareholder governance, facilitate the management of financial flows between entities, and prepare the transfer of capital to future generations. Depending on the circumstances, certain legal and tax regimes applicable to holding companies may also offer advantages, subject to specific conditions.
Why create a holding company?
Creating a holding company can serve several strategic wealth management objectives. In particular, it enables the consolidation of shareholdings in different companies within a single structure, providing a more comprehensive view and more efficient management of business assets.
A holding company can also support business development projects, reinvestment strategies, family governance arrangements, and the gradual transfer of a business. Its relevance depends on various factors, including the composition of the assets, the shareholders’ objectives, and the applicable legal and tax framework.
Key considerations for a holding company
| Issue | Benefit |
|---|---|
| Capital structuring | Centralize ownership of shareholdings and assets while organizing their control. |
| Governance | Define decision-making and management processes among shareholders, whether family members or not. |
| Financial flow management | Facilitate access to financing, dividend distributions, and capital reinvestment. |
| Business development | Support acquisitions and growth projects. |
| Wealth transfer | Prepare and organize the transfer of shares over time. |
| Taxation | Benefit, where applicable and subject to conditions, from tax regimes tailored to the ownership of shareholdings. |
Key takeaway
A holding company is a wealth structuring tool that can support asset ownership strategies, governance organization, and the preparation of business or family wealth transfers. Its implementation requires a thorough assessment of wealth, legal, and tax objectives in order to select the most suitable structure.