Home » Group Company Structures

Group Company Structure

What are the options in relation to a group company structure?

Group structures can take a variety of forms, including vertical and horizontal formats and also hybrid structures, as shown below.

Alternatively, a separate standalone company or companies can be formed with common ownership, but without a formal group structure.

Another option is to have a single company with separate trading divisions.

Why form a group structure?

There can be a number of potential commercial, regulatory, legal and tax benefits in forming a group company structure.

  • Ringfencing assets and liabilities

A subsidiary company can be used to ringfence assets or liabilities, with each company in the group having limited liability.

Therefore, if you intend to launch a new product or expand into a new market, by using a subsidiary for that purpose you can keep the assets of the business in a different group company and therefore safeguard them from the risk of the new business venture. If the new venture is successful then the subsidiary company can build its own brand and reputation independently from the other group companies, but with the benefit of their financial support.

  • Regulatory advantages

By using a subsidiary company to undertake different activities or hold certain assets (e.g. intellectual property) there may be an administrative or regulatory advantage. It may be possible to extend certain regulatory authorisations to cover other members of the group.

  • Centralised functions and assets

A group company can be used to hold, centrally, certain group assets e.g. property or intellectual property, which can then be used across the other group companies, for example by leasing or licencing them. This allows the group to exploit its assets commercially, whilst endeavouring to protect them from commercial and financial risk.

  • Tax benefits

One of the main advantages of a group structure over separate companies with common ownership is that, subject to various conditions being met, group companies have the benefit of a number of tax exemptions and reliefs between them. These include applying certain tax losses and reliefs across the group, transferring of assets between group companies and also corporation and stamp tax (or Land Transaction Tax in Wales) exemptions.

  • Eventual sale

In the future you may wish to sell part only of your business. A group company structure may help you to do so, particularly if you want to retain part of the business for future generations.

Other potential advantages include making corporate pension contributions, extracting dividends more efficiently and also rewarding key employees in one company without affecting other companies.

What steps are involved?

The process of forming a group, with the benefit of proper accounting, tax and also legal advice, is not as complicated or expensive as you might imagine. It may well be worth considering doing so to take advantage of some of the potential benefits outlined above.

The creation of a group structure can be done tax free in the vast majority of cases, and is often used in succession planning scenarios if a business partner is looking to exit.

Furthermore, assurance can be sought from HMRC, in advance of beginning the process, to provide certainty to the individuals and companies involved that no tax will be due.

If you need any advice on group company structures, please contact a member of our corporate and commercial law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.


To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.

Contact Our Team
Emily Shingler
Associate
View Profile
Rhodri Evans
Senior Associate
View Profile
Rich Craven
Solicitor
View Profile
Siobhan Williams
Senior Associate
View Profile
Stephen Thompson
Partner
View Profile

I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”

Becs Beslee, Dice FM Ltd

Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”

Rebecca Cooper, ACT Training

We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”

Karen Gale, Stepping Stones Group

An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”

Gwawr Booth, Portal Training Ltd

PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”

Ledia Shabani, Property Support Services UK Ltd

We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”

Guto Bebb, Farmers’ Union of Wales

Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”

Iwan Hywel, Mentrau Iaith Cymru

My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”

Margot Adams, Guarding UK Ltd

Darwin Gray have acted for myself and my company over a number of years and at all times we have been treated with a professional manner yet maintain a common-sense approach at all levels. We couldn’t recommend them more highly.”

Simon Baston, Loft Co

We have been clients of Darwin Gray for many years; they’ve always dealt with all of our legal matters with such professionalism. They work around us, even during awkward hours, and we feel confident we can always rely on them.”

Louise Williams, ACT Training

Darwin Gray has been acting for Siltbuster for more than ten years. We would have no hesitation in recommending Darwin Gray to other organisations small or large.”

Richard D Coulton, Siltbuster Ltd

From the very first conversation, I had no doubt that Darwin Gray should be the firm to receive our instructions on this matter. I would have no hesitation in recommending Darwin Gray.”

Sandra Warr, Tomos TV

We regularly instruct Darwin Gray. Their service in dealing with our transactional matters and disputes is always professional, prompt and efficient.”

John Poppleton, Absolute Property Management Solutions Ltd

Darwin Gray guided me through a long and extended process that would have been much more difficult had it not been for their patience and constant support.”

Ifan Lewis

Excellent and efficient service. Great result achieved, highly professional and transparent on pricing. Would recommend.”

David Stevens

Superb legal service provided. Exceeded expectations. They went above and beyond in order to provide the best service possible.”

Huw Pickrell

Very professional and understanding. They were a calming influence in a very troubling situation and they brought it to a very successful conclusion”

Rachel Jones

We have used Darwin Gray and have been seriously impressed. The personal approach is what Darwin Gray are excelling on and is the reason why we will continue to work with them in the future.”

Cadwyn Housing Association