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Holding company creation structure

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I’ve got a client who wants to set up a holding company and do a share for share exchange. I’m ok with the majority of this, but the part I am unsure about is the initial share ownership in the Holding company.

Old co. (to become the subsidiary) has 4 equal 100 ordinary shares shareholders.

Shareholders in the old co will swap each of their 100 shares for 100 shares in the new co.

But, when creating the new company what is the share structure to be created?

The company must have at least one director and shareholder.

If I create it with 400 shares in the same split and then do a share for share exchange, will the result be that I have to issue a further 400 shares in the new co. (therefore there being 800 shares) in order to do the share for share exchange?

Kind regards

Daniel

Replies (7)

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By johngroganjga
07th Aug 2020 09:43

Just issue 1 share on incorporation.

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Replying to johngroganjga:
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By Daniel Anderton
07th Aug 2020 09:58

Hi John,

Thanks for replying. Issue 1 share to my accountancy company (or any 1 of the current 4 directors), and then upon the share transfer create a further 399 shares to do the 400 shares exchange?

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Replying to Daniel Anderton:
By johngroganjga
07th Aug 2020 10:13

Simpler to issue it to one of the new shareholders so that you don't need to transfer it to one of them later.

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By Tax Dragon
07th Aug 2020 10:20

Would you consider starting with 4 shares, 1 for each of them?

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By DJKL
07th Aug 2020 10:55

Does seem simpler.

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By Daniel Anderton
07th Aug 2020 12:25

Thank you for all of your responses. Much appreciated.

Have a great weekend all.

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ALISK
By atleastisoundknowledgable...
07th Aug 2020 11:44

Good question- I’ve often wondered this.

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