In the course of registering a business, especially when you are expanding to another country, you would no doubt have come across the words “Holding company” and “Subsidiaries” during your research. However, before we get into how you can register a U.S Holdco and African subsidiary, let’s talk you through what these terms mean.
What is a Holding Company?
A holding company (HoldCo) is any business entity that owns the controlling shares in another company or companies and influences decision-making in these entities.
Usually, a holding company does not conduct any operational activities; Rather, they hold and control assets of other companies whose equity they have acquired.
In addition, this type of company will sometimes act as a financial organisation that lends, borrows, and invests in the operations of the entities they own without trading goods or services themselves.
A good example of a HoldCo in Nigeria is Flour Mills of Nigeria, with over five subsidiaries spanning major sectors like Food, Su, Agro-allied, Port Operations and Logistics, Packaging and Real Estate.
Among other benefits, a holding company helps reduce risks. In essence, if one company fails, the other businesses are protected. Also, subsidiaries of a Holdco get access to tax and lending benefits.
What is a Subsidiary?
A subsidiary is a business that belongs to a parent company or a holding company. These holding companies can claim ownership of a subsidiary as they may own more than half its stocks. If a holding company possesses 100% of these stocks, the entity can be said to be a wholly-owned subsidiary.
Subsidiaries have independent operations reflected in their taxes, liabilities, and governance. That is to say that these businesses are legally distinct and separate from the holding company.
Golden Pasta, Golden Shipping Co, Niger Mills, and Kaboji Farms are only but a few subsidiaries of Flour Mills of Nigeria.
As the owner of a new business or an already-existing one, starting a holding company is a straightforward process with Norebase. Here’s how you can set up a holding company in the U.S if you fall into any of these categories.
How to Set up a U.S Holdco and African subsidiary
Setting up a U.S holdco and African subsidiary can vary for different individuals. Such differing factors may include:
- When you have an existing African company only
- When you have no existing company
- When you have a U.S company only
I. When you have an existing African company only
If you already have an African company you want to turn into a subsidiary, simply go to www.norebase.com and register the U.S company. When the registration is completed, the shareholders of the African subsidiary will be required to either transfer or surrender and reallot their shares to the US HoldCo.
II. When you have no existing company
Firstly, register a HoldCo in the U.S by simply following these steps. If you then want to register an African subsidiary, simply start the registration process on norebase.com, select your country and fill in the name of your already registered U.S Holdco as the company owner.
III. When you have a U.S company only
The process is half-done if you already have a registered company in the U.S. You simply have to register your company in any African country on norebase.com and fill in the name of the U.S Company as the owner of the African entity and assign shares as needed.
Whether you want to register a U.S HoldCo or a subsidiary company in any African country, we have made the process as easy as the click of a button on norebase.com
Did you enjoy reading this?
To get updates on our latest features and African policies that may affect your business, subscribe to our newsletter hereRead: Benefits of registering in the U.S