What benefits can result from creating a holding company involving municipal enterprises?

Table of contents:

1. The concept of a holding company

2. The essence of a holding company is reduced to 2 essential elements

3. What are the characteristics of a municipal holding company?

4. The benefits of a municipal holding company

The concept of a holding company

The concept of holding does not have a universal definition in Polish law. A holding is a form of economic cooperation. In order to create a holding company, an agreement between the entities defining the principles of their cooperation is not necessary. In economic practice, the concept of a holding is used to describe a relationship between at least two legally independent business entities, whereby one of the entities, due to capital links, assumes a dominant position and thus the possibility of influencing the activity of its subsidiaries.

The essence of a holding company is reduced to 2 essential elements

The rights that one entity has in relation to another by virtue of these links.

On the grounds of the CCC, the creation of a holding company consists in the acquisition by companies of shares in other companies, resulting in the creation of a relationship of domination/dependence between them.

What are the characteristics of a municipal holding company?

it consists of a limited liability or joint stock company, i.e. the parent company (“municipal holding company”) and limited liability or joint stock companies, i.e. subsidiaries
the dominance of the municipal holding company must originate in ownership ties
the management of the municipal holding company must pursue strategic objectives for all group companies.

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Advantages of creating a municipal holding company
concentration of company capital resulting in an increased ability to obtain external financing;
simplification of financial flows between group companies;
the possibility of joint taxation within the fiscal group;
reduction of overheads as well as unit costs;
the possibility of applying uniform accounting and reporting standards.