Firmengruendung.de / Friday, February 29, 2008 / Categories: Limited (UK) Examples of Designing Corporate Groups Example 1 Objectives: Simple flat structure Central control Optimal protection of intellectual property such as trademarks, patents, or designs Leverage the group's image benefits This design example is tailored to business models that primarily rely on the marketing of special know-how. This could be, for example, a brand, a patent, or another form of intellectual property that often needs special protection. In the presented design model, the entrepreneur personally holds the intellectual property to protect it from the business risks of the actual marketing process. The entrepreneur enters into an agreement with his Know-How Company regarding the exploitation of the know-how. The Know-How Company grants a license for use to the Marketing Company. The flow of payments for the exploitation of the know-how goes accordingly in reverse; from the Marketing Company - through the Know-How Company - to the entrepreneur. However, tax-wise, the so-called hidden business division must be considered. Example: Master butcher A has secured a special recipe for a sausage. The sausages produced according to the recipe are marketed through the Butcher A Marketing Company. This company pays royalties to the Butcher A Know-How Company. Butcher A Know-How Ltd. has an agreement with Butcher A for the exploitation of his recipe. In practice, it is often observed that there is a desire for more discretion in the market, which is why the shares of the parent company are often held in trust. Example 2 Objectives: Create tax effects for the event of a future company sale (Exit). This design example demonstrates the mechanisms of a holding solution in the event of a company sale. It is equally applied for a possible sale of the entire company, as well as for the sale of individual business units, provided these have been outsourced into independent companies. In this design model, the entrepreneur himself does not hold the shares of the operating business company, but another company (Holding) does. The entrepreneur holds the shares of this Holding. When the business company is sold, the Holding realizes a capital gain. Of this capital gain, only 5% is taxed in the Holding Ltd., meaning 95% of the gain is not taxed. Taxation occurs at the entrepreneur's level only when he distributes these funds. The entrepreneur is free to decide if, when, and how much to distribute. This way, the entrepreneur can, for example, plan and implement a very intelligent retirement provision. The construction of the holding structure thus provides the entrepreneur with significantly more scope for action and design with minimal effort. A quick (restructuring) solution - just before a planned sale - is excluded due to legal requirements. Alternative objectives: Preservation of higher discretion A holding structure is also often used to achieve additional objectives. Possibly in conjunction with a trusteeship, entrepreneurs often want to handle the actual shareholder relationships more discreetly. Example 3 Objectives: Differentiation of individual Profit Centers Allocation of profits and losses of individual Profit Centers for tax optimization This design model is used by entrepreneurs in practice in business models where several (clearly defined) Profit Centers are to be created. A good example of this are trading companies with sales outlets or branches at different locations. Each branch is run as an independent .... & Co KG. The profits or losses of the individual branches are reconciled at the top of the corporate group. Previous Article Introduction to Corporate Groups Next Article Forming as Group and Holding Print 4347 Tags: GroupHoldingLimited Related articles Basics of the LTD Structure Purpose of the LTD and Opening of Branches Status of Limited Companies in Germany Changes by Secretary or Director Forming as Group and Holding