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Investment Holding Company

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Managing a new business and growing an established business through a holding company structure has a proven track record of success. All over the world, successful companies and well know companies are actually holding companies, not operating companies. Generally, these holding companies will not perform any regular activities or functions and will not manage business operations. These holding companies perform the sole function of manage investments in securities. The assets in a holding company can include:

  • Preferred Stocks
  • Common Stocks
  • Corporate Bonds
  • Interest in a private company

Typically, the holding company, usually formed as a Limited Partnership or Limited Liability Company (LLC), owns the voting stock in the child companies, enabling the parent to control the policies and management of the child, without being exposed to the liabilities of the child. Each of the child companies may hold a different asset or type of asset, including:

  • Bonds
  • Trademarks
  • Patents
  • Stocks of foreign companies
  • Song rights
  • Copyrights
  • Equity funds
  • Real estate
  • Other LLC intersts
  • Limited partnerships
  • Brand names
  • Other assets which hold some value

Ultimately, the entities which hold assets like those listed above will be operated by an operating company that has the authority to enter into agreements that generate value for the holding company. In this way, the assets themselves are protected from creditor claims because if the operating company incurs some form of liability, the assets and holding company will bot be subject to the creditors claims.

Two Forms of Holding Companies

There are two types of holding companies, one which serves as a vehicle for investors while the other serves as a risk management tool for a bigger corporation. When the holding company owns a business, it is termed as a wholly-owned subsidiary. The holding company will control the operations by appointing managers and will have the full authority to oversee the management. However, a holding company does not participate in the everyday operations of the businesses.

Conclusion

If you think a holding company structure might be an effective way to manage your assets, shield those assets from liability, and shield your personal assets from liability, contact us to schedule a consultation with our experienced Colorado attorneys through the contact link on our website.

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