The choice to create a family holding company is still poorly understood by most entrepreneurs. Yet it is a strategic solution that can play a key role in the life of a family business. It allows its assets to be protected and better managed as it grows and evolves, perhaps by adding new business segments and family members.
The family holding company is an institution that can have an advantageous impact both tax-wise and with a view to proper planning for the generational transition. Indeed, the latter is one of the most insidious obstacles to the future of a family business, as it is often dominated by emotion rather than rationality.
The transfer of ownership and control of assets from one generation to the next involves important cultural, relational and technical issues. Succession is capable of destabilizing established balances, so it requires great foresight, a strategic approach and clear thinking.
The establishment of a family holding company, in addition to providing a more effective management structure, can facilitate the achievement of a common will among several heirs.
❎ WHAT ARE THE BENEFITS AND WHEN TO DO IT
❎ What is a family holding company and what benefits it can offer
A family holding company is a company controlled by members of the same household. Usually, it is a limited liability company model, as it provides greater protection, but it is possible to establish it with any legal form. The choice depends on the context and specific needs.
❎ The main features of a family holding company are very significant from an asset protection and governance point of view:
- the shareholders are members of the family or the same family branch;
- control of the holding company is in the hands of the founding partners (or the founder);
- shareholdings held in the companies belonging to the group contribute to the holding company;
- any family conflicts are handled at the holding company level and are not reflected in the various group companies;
- the holding company has direct and unified control of the subsidiaries, and this ensures stable governance;
- corporate governance choices can be assigned to one or more individuals outside the family;
- through the stipulation of specific clauses in the articles of association, which recognize special rights, and/or shares with multiple or limited voting rights, a specific ownership structure can be guaranteed and certain aspects relating to shareholders and the inclusion of future generations can be regulated.
Thus, placed at the top of a group, the holding company is a legal institution that allows it to carry out a directive and coordinating activity vis-à-vis other companies, whose capital control and shareholding management it holds. As a result, particularly when in the presence of entities belonging to different branches of the family, it ensures a more streamlined operation unencumbered by possible disagreements among shareholders.
Often, the holding company concept is associated only with large multinational corporations. In reality, there is nothing to prevent family-owned SMEs from taking advantage of the many benefits it offers, both in terms of favorable tax treatment and the organization and family governance of assets.