Drafting the corporate objective of a holding company is an exercise that can be difficult. In fact, it prescribes all the activities that are carried out in a structure. However, in the case of a holding company, they can be many more complex. Therefore the corporate objective of the holding must be carefully crafted for it to exist and function properly. Here’s how to define and write down the corporate purpose of a holding company.
A Few Reminders on the Corporate Purpose of a Holding Company
The corporate purpose of a company defines all the activities that the company can do. Conversely, under the penalty of sanctions, it is forbidden to carry out an activity not provided for by its corporate purpose.
When forming a holding company or parent company, it is a question of accurately describing the activity or activities of your company. In short, its corporate objective is to hold equity securities in various subsidiaries. There is also an APE code dedicated to the holding company: 64.20Z.
However, the corporate purpose of a holding company is not always limited to one activity.
In fact, it should be noted that nothing prevents the holding company from adding other activities to its “natural” corporate purpose. This is why it is essential to write down a holding company’s corporate purpose to precisely describe what you want to be able to do with your company.
The corporate purpose of a holding company is unusual in nature as the holding company is a form of organization and not just a legal form such as SARL or SAS.
The definition and drafting of the corporate objective of a holding company requires special attention. Even if it is always possible for a company to modify its corporate objective after its formation, it is better to take care of drafting from the very beginning to avoid additional formalities and costs.
In order to have companies carrying out different activities, it is necessary to be as precise as possible so that the corporate objective is exactly matched with what they do. These holdings are specific and also called animator, patrimonial, personal, real estate or even family.
Please note that this specification must mandatorily be indicated in the Corporate Purpose.
Corporate Purpose of a Holding Company
A lead holding company is a holding company whose complementary activities include providing advice, materials and/or human resources, or even assisting companies in which it has an equity interest. Therefore its corporate objective should reflect the services and activities it provides.
Example : “The acquisition, holding and management of securities, shares or shares in all companies incorporated or incorporated in any form, as well as all advisory and support services of an administrative, commercial, accounting nature, human, technical or otherwise, provided by those companies. ,
Corporate Purpose of a Holding Company
The purpose of a holding company is to create an inheritance for you, either alone or with others. It is an interesting alternative to patriarchal civil society that allows you to own movable property, immovable property or even copyright through the acquisition of shares or shares in dedicated companies. Therefore the corporate objective of asset holding should be broad enough to allow you to make the necessary investments, but also specific enough to describe the activities of your structure.
Example : “The acquisition, holding and management of securities, shares or shares in companies whose corporate purpose is the acquisition and management of assets. An ancestral holding company is formed for the creation of an inheritance, customizing it, managing it, streamlining its transmission, as well as for tax optimization purposes.
Corporate Purpose of a Real Estate Holding Company
A real estate holding company, or SCI holding company, is a holding company that holds the majority of securities and shares in SCI, a civil real estate company. It aims to acquire and develop real estate assets through investment and management activities.
Example : “Acquisition, holding and management of securities, shares or shares in civil real estate companies, existing or to be created, as well as companies with major real estate activity. The objective of a real estate holding company is to build a real estate legacy, manage it and grow it through management, mentoring and investment functions.
What are the consequences of a poorly formatted corporate objective for your holding company?
The corporate purpose of the holding company frames and limits its activities. Thus, a poorly crafted corporate objective could prevent you from developing your structure the way you want, or worse, you could face legal and/or financial penalties. In fact, if the corporate objective is exceeded, for example, the holding company is no longer committed to the co-contracting party.
In addition, the corporate objective of a holding company, like the corporate objective of the company, commits the structure with respect to third parties. That is to say, the acquisition of equity securities gives you partner status within your daughter companies, and commits you to respect the specific terms for each. Poor drafting of your holding company’s corporate purpose can have consequences for your subsidiaries.
To avoid these inconveniences, it is advisable to think carefully about the drafting of the corporate objective of your holding company. To do this, you can go with a legal expert: lawyer, notary or chartered accountant. These guide you in drafting your corporate objective as per the current or future needs of your company, keeping in mind the legal or tax implications.
Lastly, you can also make use of the services of a LegalTech who will help you in writing the corporate objective of your holding company as per its specifications.
questions to ask
What is the purpose of a holding company?
The main corporate objective of a holding company is to own and manage securities, shares or shares, to acquire a stake within its subsidiaries.
What are the Different Types of Holding Company?
What activities can a holding company do?
Its main activity is the holding of equity securities. However, a holding company may carry out all such additional activities as it deems necessary, provided they are included in its corporate purpose.