Holding company structures for growing groups

Who we help

• Business owners with several companies held personally who want to bring them under one parent company.
• Companies with surplus cash or property that should be separated from the risks of the trading business.
• Family-owned companies preparing for succession, within or outside the family.
• Shareholders planning to sell their shares, in whole or in part.
• Companies that want to bring in new investors, from inside or outside the EU, and to protect what they already have before the investor comes in.

What it is and when it makes sense

Legally, a holding company is a company like any other, almost always a Spanish private limited company (Sociedad Limitada, SL), but any company whose corporate purpose includes holding and managing shareholdings can act as one (SA, SAU, SLU and so on). What makes it a holding company is its role: being the parent of a group. Instead of the owner holding shares in several companies directly, the owners hold shares in the holding company, and the holding company owns the operating companies, known as subsidiaries.

The difference between a holding company and a group is one of perspective. The group is the set formed by a company that controls others and the companies it controls. The holding company is the company at the top of that group. A group can exist without a pure holding company, for example when a trading company also owns other companies.

A holding company is one of the forms a company’s corporate architecture can take, but not the only one. That is why, before proposing one, we check whether another structure would meet the goal better.

How it is set up. There are two usual routes:

• Share-for-share exchange: the owners contribute their shares in the operating companies to a new company, the holding company, and receive shares in it in return. This is the most common way to create a holding company over existing businesses.
• Non-cash contribution of other assets: property or other assets are contributed to the holding company. This is sometimes combined with a demerger to separate trading from property, as explained in our page on corporate restructuring.

The tax treatment of each route is different and must be assessed by your tax adviser before deciding.

It makes sense when:

• The business generates profits that will not be paid out to the owners and are to be reinvested in other activities.
• There are several business lines with different risks.
• One of the companies may be sold, or an investor may come into only one of them.
• The family wants to prepare the succession with an orderly structure, often alongside a family protocol.

When it does not. A holding company adds another company, with its own accounts, formalities and costs. If there is a single small business and no plan to reinvest or sell, it may not be worth it. The tax advantages sometimes associated with holding companies depend on specific conditions and must never be taken for granted.

When it makes sense

• You own two or more companies personally and want them under one parent.
• You want to separate property and cash from the trading business that bears the risk.
• You are preparing to sell a group company and want to do it in an orderly way.
• An investor is coming into one subsidiary only.
• You are planning a family handover and want to keep ownership together.

What the engagement can include

• Review of the current structure and your medium-term goals.
• Design of the holding company and the group: which companies sit under it, which assets are contributed and who the shareholders are.
• Coordination with your tax adviser to choose the contribution route and check the conditions.
• Setting up the holding company or adapting an existing one: articles of association, board and public deeds.
• Documenting the share-for-share exchange or the non-cash contribution, including any legally required reports.
• A shareholders’ agreement for the holding company where there are several owners or family branches.

What the scope depends on

• The number of companies and shareholders involved.
• Whether the holding company is newly formed or an existing company is adapted.
• Whether only shares, or also property and other assets, are contributed.
• Whether valuations or expert reports are needed.
• Whether it is combined with other transactions, such as a demerger or a new shareholder.

Once we have studied the documents, we send you a quote tailored to your case.

How we work

1. Initial contact. You tell us about your situation and send us the documents.
2. Review of the documents and proposals. We review the documents and set out the possible routes, including whether a holding company suits you or whether there is a simpler alternative, checked with your tax adviser.
3. Quote and letter of engagement. We send you the quote and the letter of engagement in writing.
4. Implementation and follow-up. We see the matter through until the group is running with its governing bodies in place, and coordinate with your tax adviser or accountants (gestoría), the notaries and the registries: the Commercial Register and the Land Registry.

Who handles your matter

Your holding structure is handled directly by Sara González Domínguez, a practising lawyer (abogada) registered with the Málaga Bar Association (no. 8502), whose practice focuses on corporate architecture, holding companies and M&A transactions, always backed by the rest of the firm’s team.

If the holding company is a family one, we also recommend reading our guide to family holding companies.

Illustrative example: two brothers own, in equal shares, a construction company and a company that lets warehouses. They set up a holding company and contribute their shares in both. Years later, when they receive an offer for the construction company, the seller is the holding company, and the warehouses stay in the group unaffected by the deal.

Frequently asked questions