A holding company is often an anonymous business entity that exists only for tax advantages.
A holding company that holds the assets, usually shares, of another company, offers many advantages. Holding companies tend to be relied upon in many complicated business structures. While setting the company up may be simple, maximizing the benefits of the company may require advice from a tax or legal professional.
Instructions
1. Plan a strategic use for the holding company. There are a number of factors that can help determine the most advantageous methods of using a holding company, such as numerous business partners, multi-jurisdictional presence, or debts and outstanding liabilities of other companies sought to be held by the holding company. Just as businesses draft business plans, it's a good idea to have a similar document for the holding company.
2. File Articles of Incorporation. If the holding company is to have an official name, it will be necessary to pay a $20 fee to obtain a NUANS report, verifying that the name is permitted and not confusingly similar to another name. It is not necessary to have an official name, and in lieu, the corporation will be recognized by the number assigned to it by Corporations Canada, e.g. 1234567 Ontario Inc.
The Articles of Incorporation contain some sections where legal advice may be helpful, especially concerning information and rules about the shares of the corporation. Given that a holding company may have a complicated share structure or unusual share restrictions, these sections of the Articles of Incorporation should be given particular attention.
3. Transfer assets into the holding company. Once the incorporated company has been approved by Corporations Canada, the incorporator will receive a Certificate of Incorporation. Those controlling the corporate will of the holding corporation can then go about acquiring whatever assets they deem to be suitable investments. Typically, the shareholder of a holding corporation will also be the shareholder of a operating business, and will sell those personal shares to the holding company, to obtain many benefits of that particular corporate structure.
