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Why you should consider starting a holding company

Starting a holding companies in UAE could be the solution that your company is looking for. It can open up your company to vast opportunities and also protect you from risks that can be encountered in doing business. This will be your guide to how you can establish a holding companies in UAE and why you should even consider establishing one in the first place.

What is a holding companies in UAE?

It’s a business entity created for the sole purpose of owning and controlling other companies. It operates as a financial organization that lends, borrows manages the interests of its own operating companies.

Typically, a holding company does not manufacture anything, sell products or services. Rather, holding companies in UAE hold the controlling stock in other companies.

The operating companies that belong to the holding company are called subsidiaries. These are usually managed by a parent company (Corporation or LLC).

Some 80% of small businesses are already LLCs, and these LLCs can later be incorporated as Holding companies.

Assets that a holding company can hold

The main goal of starting a holding company is to allow it to hold and control Assets. These assets come from any of the subsidiaries in your corporate group.

Your holding company can hold any of the following assets:

  • Multiple subsidiary companies
  • Corporate equity, shares, shares and stocks
  • Intangible assets like patents, copyrights, trademarks, trade secrets, and other intellectual property.
  • Real Estate, equipment, vehicles
  • Mutual funds, hedge funds, stocks, and bonds.

Benefits of starting a holding company

The main reason why people start holding companies is to manage and reduce risk. It is meant to protect both businesses and assets in the event that one of the subsidiaries fails. These holding companies provide asset protection for the subsidiaries and they also offer business owners better tax rates and lending benefits.

Holding companies can borrow money from financial institutions at lower interest rates and lend it to its subsidiaries at cheaper rates as well. As a result, subsidiaries benefit from reduced operating capital.

Holding companies in UAE also provide protection from creditors, lawsuits and economic recessions. The pandemic has changed how people live and has caused a significant economic downturn.

By establishing a holding company and making sure it does not get involved in co-signing any of its operating company’s debt – one can protect themselves from unstable economic conditions caused by the global pandemic. At the present moment this is a very attractive option.

Holding companies are not necessarily for large companies only. Small companies can establish them as well and reap unlimited benefits from them. Its pretty easy! We will guide you through the process.

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