Structuring a director’s shareholdings and investments through a holding

The situation

Our support

1. 01

   Defining the role of the holding

   We first determined the functions that the holding was to perform:

   • hold the securities of the operating company;
   • pool the dividends and investment capacity;
   • finance the creation or acquisition of new activities;
   • organise the group’s governance;
   • in due course, bring the director’s children into the capital.

   We compared the possible corporate forms and organised the articles of association so as to allow the director to retain control of the strategic decisions, while preparing the future evolution of the shareholding.

   The holding can thus constitute a legal, tax, financial and succession tool, allowing in particular the shareholdings to be pooled, ownership of the assets to be separated from their management, and situations of deadlock between heirs to be anticipated.

   Point of attention. Creating a holding does not respond solely to a tax objective. It must correspond to a genuine ownership, investment and transmission project.
2. 02

   Organising the flows and the investments

   We then defined how the group’s cash would be brought up and used.

   Subject to compliance with its conditions, the parent-subsidiary regime allows the holding to receive its subsidiary’s dividends without subjecting them in full to corporate income tax. A 5% share of costs and expenses remains included in its taxable profit.

   The cash retained within the holding could then be allocated to several projects:

   • financing a new subsidiary;
   • acquiring a shareholding in another company;
   • business angel investments;
   • investing part of the cash;
   • financing real estate investments through separate vehicles;
   • financial support to the group’s companies.

   We also distinguished the sums needed for the director’s living expenses, which had to be received personally, from those intended to be capitalised and reinvested by the holding.

   Point of attention. The holding does not remove the director’s personal taxation. It makes it possible to defer that taxation for as long as the cash stays within the structure and is used to finance new projects.
3. 03

   Securing governance and preparing the transmission

   Finally, we organised how the holding would operate over time:

   • the allocation of powers between the management bodies;
   • the approval and transfer rules for the securities;
   • the distribution policy;
   • the formalisation of the flows between the companies;
   • the documentation of the investment decisions;
   • the legal, accounting and tax monitoring of the structure.

   Particular attention was paid to the reality of the role performed by the holding. Its substance, its functions and the decisions actually taken must be consistent with the characterisation claimed. A mere interposition without an economic role, or the use of the holding to convert remuneration linked to the director’s duties into dividends, presents tax and social security risks.

   The structure was also designed to allow a gradual transmission of its securities, in particular by full-ownership or bare-ownership gift, while retaining governance suited to the family project.