Company Formation

[edders1983]

Hey Guys,

I want to eventually set up a group of companies that work under the same name much like how Virgin has many different strands. (obviously thinking big) but its more for practicality so if need be I can sell arms of the company!

I dont know enough about business formations and just wanted a little bit of advise

Do i set up a holdings company

e.g. XYZ Holdings Ltd

and then open up a Limited company for each member. Bare in mind these members will be in completely different areas so its not suitable to set them up as departments etc!

e.g.
XYZ Lighting ltd
XYZ Adult entertainment ltd etc


I want the holdings Company to be in charge of the members etc.

If so how do i compile the Accounts for the Holding Company. As in how would i get this to earn its money if all the members are making the money!

I know its quite a broad question so please be kind :)

Also i know i want to set up as a Limited Company so please don't tell me to setup as a Sole trader etc first!

Cheers

ed

[Vickyl]

There are a number of parts to this question and I will attempt to structure the answer in a logical manner.

A. Firstly, when you register a company which contains the word “holdings” in the name, written justification must be provided to Companies House which shows that it will in fact be a holding company.

In order for the holding company to successfully incorporated, you would have to demonstrate your intension to set-up the other companies within three months. You would also have to confirm that at least 51% of their shares will be held by this head company.

B. In terms of trading in completely different areas of business, it is not mandatory that a separate company be incorporated for each of these activities (unless of course you choose to).

Most formations of companies limited by shares are done so using memorandum and articles of association which permit it to engage in any legal business activity. Such activities can be carried out singularly or simultaneously in an unspecified variety of areas.

C. In situations where a holding company owns the majority of shares in other entities it is not uncommon for it to levy a management charge on the subsidiaries.

Such as charge could cover management time, accounting and budgeting tasks undertaken for the group by the holding company and other expenses incurred on their behalf.

The view on what constitutes an appropriate charge would depend on what duties the holding company performs for the other businesses and what value can reasonably be placed on them.