MGS Private advises on inserting a head company or head unit trust. There are many benefits of a group structure.
What Is a Group Structure?
A group structure is formed when a company (directly or indirectly) owns one or more other companies. The top company in this structure is called the parent or holding company, and it can have several subsidiaries beneath it. All companies within the group fall under the ultimate ownership and control of the parent company.
Benefits of Inserting a Head Company:
- Risk Management and Asset Protection:
- By inserting a head company, you can ringfence assets and liabilities. Each subsidiary within the group has limited liability, safeguarding existing business assets from potential risks associated with new ventures.
- For instance, if your business expands into a new product or market, using a subsidiary ensures that existing assets remain protected while the new venture operates independently.
- Diversification and Brand Building:
- A separate group company allows for diversification. New ventures can build their own brand and reputation, supported by the existing business.
- This approach helps protect against reputational and commercial risk. The parent company’s reputation remains intact even as subsidiaries explore new opportunities.
- Legal and Tax Benefits:
- Group structures offer potential commercial, regulatory, legal, and tax benefits.
- Limited liability within subsidiaries reduces financial risk.
- Tax planning becomes more efficient, as profits and losses can be offset across the group.
Depending upon the circumstances and the State or Territory the head company may be a unit trust. This presents many possible solutions especially in relation to property developers.
MGS Private advises on inserting a head company or unit trust when creating or adding to a group structure.
