Holding Company as 50% partner

[btkeays]

Good morning!

I have recently started a business whereby I am in business in my personal capacity with a Holding Company 50/50. I have noticed that in the latest financial statement under general information that my partner (a company) is listed as the holding company.

Does this have any bearing on me in my personal capacity?

Also, if I were to register a holding company (which I plan to do) and then transfer my shares, how would this line in the financial statement read? As there
would then be 2x holding companies owning 50% each.

Thanks in advance.

[BusFact]

In my experience, its a little unusual to list the shareholdings or holding companies in the financial statements - at least I don't think my auditors do it. They do however list related parties which have dealing with the companies such as loans or inter company transactions. But nothing about shares.

I am not sure of any consequences of this in your personal capacity - at least I can't think of any. Anything in particular you are worried about?

I would ask the accountant who drew up the financials why he felt it necessary to list the shareholder and how he would present it of there were two shareholders.

[Andromeda]

None of these posts make any sense. Just gibberish. I know there was a flood, but good heavens.....

[btkeays]

None of these posts make any sense. Just gibberish. I know there was a flood, but good heavens.....

Not sure what you are so confused about, perhaps you are on the wring forum.

[btkeays]

Hi Busfact

Thanks for the response. There is nothing I'm concerned about in particular.... This is is the first company I have started and I'm ;earning as I go so it just stuck
out a little. But yes, I will most certainly ask how it will be reflected in future statements should I transfer my shares to a newly registered holding company
in my name. Thanks again!

[HR Solutions]

A holding company is his way of "holding" his shares. As long as it is clear that HIS shares are in a holding company and your shares are clearly shown and in your personal capacity then I don't really see too much of a problem. Having his portion in a Holding company also protects him to a certain extent. There are lots of different ways e.g. you could even put yours in a Trust...

[btkeays]

A holding company is his way of "holding" his shares. As long as it is clear that HIS shares are in a holding company and your shares are clearly shown and in your personal capacity then I don't really see too much of a problem. Having his portion in a Holding company also protects him to a certain extent. There are lots of different ways e.g. you could even put yours in a Trust...

Hi HR Solutions

Thank you for your response.... I have been unsure of whether I should register a holding company or a open up a trust to transfer my shares to. I am almost certainly going to start another separate company down the line and I am therefore leaning towards a holding company. I suppose there are many ways to go about it and I am very unsure of which would serve me better, i.e. the pro's and con's of each.

The only reason I would prefer registering a holding company is that my shareholding in the said company would then last forever until the company becomes deregistered, or will the same stand for a trust?

Apologies for sounding ignorant but I am learning as I go and any advise is valuable to me.

[HR Solutions]

I don't know too much about Holding companies, but once a Trust is formed it is there for as long as you want it.

[Basment Dweller]

The only reason I would prefer registering a holding company is that my shareholding in the said company would then last forever until the company becomes deregistered, or will the same stand for a trust?

This is not entirely true, the shareholding of your company will form part of your estate when you die and may not 'last forever' as an executor will step into your shoes and distribute the asset to your heirs.

This is not the case with a trust, in particular an inter vivos trust (living trust) where you transfer your assets while you are still alive, and when you die, there is no probate or executor, but instead the trustees you appoint will continue managing the assets on your behalf according to the rules that you as the founder stipulate in the trust deed.

See the difference?

[HR Solutions]

Yep if I die the Trust continues in exactly the same capacity and will elect a new Trustee. Whatever businesses or properties etc within the Trust remains and does not form any part of estate etc.

[Andromeda]

This is not entirely true, the shareholding of your company will form part of your estate when you die and may not 'last forever' as an executor will step into your shoes and distribute the asset to your heirs.

That is not 100% correct The estate will own assets comprising the shares; not the assets of the company. So the company and it's assets live on.....

[Andromeda]

Hi HR Solutions

Thank you for your response.... I have been unsure of whether I should register a holding company or a open up a trust to transfer my shares to. I am almost certainly going to start another separate company down the line and I am therefore leaning towards a holding company. I suppose there are many ways to go about it and I am very unsure of which would serve me better, i.e. the pro's and con's of each.

The only reason I would prefer registering a holding company is that my shareholding in the said company would then last forever until the company becomes deregistered, or will the same stand for a trust?

Apologies for sounding ignorant but I am learning as I go and any advise is valuable to me.

Hi Btkeays. My own father just passed away so my mood was less than helpful.

There are, when referring to profit companies, 3 types. Cancel out state owned. That leaves 2 type. These are public companies and private companies. We can ignore public companies, so that leaves only private companies.

A private company can be owned by a natural person or a juristic person.

You stated at the outset that you owned 50% and your "partner", another company, owned the other 50% and that that company was listed as as the "holding company". Normally, a company needs to hold 50%+ to be a holding company. I say normally because, as always, it is not that simple. A company can hold substantially less than 50% but might control the board, via the MOI or via a Shareholders Agreement. In such instances the reference may well be correct.

You cannot register a Holding Company. There is no such thing when it comes to registration. Being a holding company is simply a commercial concept that arises from who controls the held company, whether by shares or by agreement or by MOI.

There are no other considerations.

[HR Solutions]

What do u mean their are no other "considerations" ???

[Andromeda]

What do u mean their are no other "considerations" ???

When you register a profit private company, it is just that. There are no other considerations such as "holdings company". It is simply a private company.

And by the way, in compliance with IFRS, the ultimate holding company as well as the identity of the shareholders, are required to be disclosed in the AFS.

[BusFact]

And by the way, in compliance with IFRS, the ultimate holding company as well as the identity of the shareholders, are required to be disclosed in the AFS.

All shareholders or only those above a certain %?