International corporate structures

The decision to create international corporate structures involves a series of advantages and disadvantages that must be studied before creation. In this post, we will detail what international corporate structures are, what a business holding is and what advantages it provides.

Although we all understand what a company is, the truth is that each company is a world and can have one dimension or another, develop various types of activities, act in different markets and adopt different forms.

Why is an adequate corporate structure important?

When an organization chooses the appropriate corporate structure for each moment:

• You will be able to benefit from tax advantages.
• It will give a better image to your clients and suppliers.
• It will optimize the use of your resources.
• You will obtain a greater benefit at a lower cost.
• It will diversify the risk.

For example, it may be the case that a company that carries out several activities creates a company for each activity, thus limiting liability to each branch of activity.

What is an international corporate structure?

Generally, an international corporate structure involves a parent company in one country (Spain, for example), which owns all or part of the shares of other companies in one or more foreign countries.

Depending on the number of shares held by the parent company, it will exercise more or less control over the other companies.

With the group of companies, what is called business holding is formed. This concept is regulated in the Commercial Code that establishes that a group exists when a company has control of another or other companies. It is understood that this control exists when:

• Has the majority of voting rights.
• You can appoint or dismiss the majority of the members of the administrative body.
• You may have the majority of voting rights by agreement with third parties.
• He has appointed with his votes the majority of the members of the administrative body.

What advantages and disadvantages of a holding-type structure?

A holding company structure has various advantages that may be the following:

• Decision-making is easier, so there will be no blockages.
• In some cases, the losses of one company can be offset against the profits of another.
• You may benefit from tax advantages such as tax consolidation, bonuses or deductions.
• You can have a group strategy that will allow you to better adapt to changes and grow.

As for the disadvantages, they will be the following:

• It can become a group that controls the entire market and does not allow free competition.
• Groups of companies or holdings are not suitable for any situation or company, so a detailed analysis of the activity, the type of client, taxation, applicable regulations, etc. is necessary.