Holding companies are present to allow companies to own shares of other companies, rather than coming up with their goods or services themselves. Holding companies are legal entities, and they exist to play an important role in the organisation. Having this type of company is strategic, and it is geared to prepare the parent company to achieve its long-term goal. Most holding companies are set up in strategic countries that allow businesses to operate at their optimal capacity. Although setting up a holding company can sound complicated and tedious, there are various ways to fully understand the concept of setting up a holding company in Singapore.
Listed below are some of the key roles that holding companies play in your business structure:
Centralised Control and Ownership
Most business owners tend to worry about the amount of control that they will have over their overall operations once they expand. While there are numerous risks to this move, setting up a holding company will actually allow the parent company to oversee and manage its subsidiaries under one umbrella. Your control over your business will ultimately widen, and your capabilities will also increase.
This model for your business will facilitate a more efficient operation that is consistent throughout your subsidiaries.
Tax Efficiency
As part of maximising their business capacity, businesses try to utilise holding companies created under the jurisdiction of countries that offer tax treaties and exemptions. This will allow them to focus on increasing their income without allocating so much to other expenditures such as taxes.
As a business, it is always a priority to optimise dividends and capital gains as well as cross-border profits to reduce double taxation.
Protection of Assets
Businessmen are risk takers. However, setting up a holding company will reduce the risk and protect the company’s assets. To help you understand better, in case one subsidiary is facing any financial trouble or legal problems, the parent company as well as the other subsidiaries will remain protected. Holding companies isolate your risks and increase the protection of your company.
Expansion to Global Markets
If you are a business that is looking to grow and expand in the global market, holding companies make it less complicated to establish and manage. Countries such as Singapore are more open to investors who are looking for joint ventures and partnerships. This business structure is widely adopted in the country, which gives businesses a strategic advantage.
Compliance Benefits
Jurisdictions such as Singapore, Hong Kong, or Luxembourg entice investors to start a business in their respective countries by providing them with investor-friendly regulatory setups. The structure of holding companies will ensure that businesses follow through with the guidelines provided while taking advantage of the benefits offered.
How to Jumpstart a Holding Company?
Setting up a holding company requires you to work with a trusted company. Acclime Singapore can help you make sure that the company you created is in line with the laws of Singapore and the Asia-Pacific region. Visit the Acclime Singapore website to know more about how you can expand in the global market!.
