What Is a Holding Company & Its Importance in the UAE

Over the past decades, the UAE has become one of the most preferred investment destinations across the globe. With the development of the business, many entrepreneurs think of establishing a holding company in order to improve their business management.

Holding company is widely used by entrepreneurs and investors as the tool to protect assets, manage business operations, expand, and invest.

What Is a Holding Company?

Holding company is the company which holds shares or assets of other companies but does not conduct business activities.

Thus, the holding company becomes the parent company while other companies operate as its subsidiaries.

Holding company can have shares in the following assets:

For example, an entrepreneur or a wealthy person owns the following businesses:

Instead of owning each company separately, the entrepreneur establishes a holding company and makes all the other businesses to become its subsidiaries.

Why Investors Establish Holding Companies in the UAE

Asset Protection

Asset protection is one of the major reasons for establishing a holding company.

Holding company becomes a shield between ownership of valuable assets and risks related to their operation. In case any of the operating businesses faces problems, the assets will still remain safe.

It is especially useful for:

With the growth of the number of companies, management becomes more complicated.

With the help of holding company, investors can:

It is especially useful for family-owned businesses and corporate groups.

Tax Planning & Corporate Structuring

The UAE is known for its beneficial taxation system.

Holding company can help the company in:

Taxation rules will depend on the corporate structure, jurisdiction, and UAE Corporate Tax. Professional tax advice is highly recommended.

Easier Ownership Transfer

Through a holding company, the entrepreneur can:

It becomes crucial in case of a family business.

Centralized Management of Investments

Investors in the UAE often use holding company to manage:

Thus, they do not have to manage all these assets separately but everything will be handled by the parent company.

Types of Assets That Can Be Managed Through a Holding Company in the UAE

Holding company can manage the following assets:

Several free zones are popular among entrepreneurs who wish to create a holding company structure:

The choice of a free zone depends on such aspects as:

Documents usually needed to establish a holding company include:

If the shareholders are corporations, they will need attested legal documents.

Points to Take into Consideration

When deciding to establish a holding company in the UAE, it is recommended to take into account the following aspects:

Professional corporate structuring will become extremely important in order to avoid possible problems in the future.

Why Professional Assistance Is Important

Depending on the complexity of the business, establishment of the holding company may take considerable amount of time and effort. Such factors as number of subsidiaries, international activities, asset types, tax residency, and bank accounts should be taken into consideration before beginning the process.

Professional consultant can help investors:

Holding company is a great tool for entrepreneurs and investors to protect their assets, manage several companies at once, structure their investments, and plan for the future.

With the favorable environment, international recognition, and corporate flexibility, holding companies are likely to remain an important part of corporate structuring in the UAE.

Nevertheless, every investor’s situation is different. Proper structuring, tax evaluation, and professional help will be crucial in order to establish a holding company in the UAE.