that a new business jeopardizes another, by individualizing the new venture to avoid risking what is already functioning and strategically and safely paving the way for new businesses that are about to start or whose operations are already underway.
The General Law of Commercial Companies recognizes that each company has a distinct legal personality from its members, even if they are companies that join as partners or shareholders in a new company. This means that existing companies can be shareholders in new companies.
Asset protection consists of each company engaging in one or more activities similar to or complementary to those that gave rise to the main business. In this regard, the originating business will avoid jeopardizing what is already functioning by individualizing the activities of the complementary business in another company.
In a holding structure, the obligations of one company are not shared with another, as each company has a distinct legal personality, and each is responsible for fulfilling its own obligations.
It is important to mention that, contrary to common belief in the business environment, the partners or shareholders of one company do not necessarily have to be partners in a new company; each can have different partners and varying percentages based on their contributions.
Corporate Governance in Holdings
Corporate governance in holding structures is a crucial component to ensure efficiency, transparency, and accountability in the management of these business entities.
This refers to the practices and policies that govern how a company is directed and controlled, providing a framework for holdings to balance their oversight and control roles while promoting strategic growth.
Policies and guidelines may vary depending on the structure and size of the company, as well as the sector and jurisdiction in which it operates. However, they typically include aspects such as the structure of the board of directors, the separation of management and oversight roles, the management of conflicts of interest, transparency and disclosure practices, risk management, the protection of the rights of shareholders and other stakeholders, and corporate social responsibility, among others
An important principle to apply in holding structures is that of ‘centralization of functions and services.’ This principle implies that certain corporate functions (such as finance, marketing, human resources, information technology, etc.) are managed at the holding company level rather than at the subsidiary level. This can increase efficiency, reduce costs by leveraging economies of scale, and allow for better coordination and oversight of activities across all companies in the group.
Cost Optimization
An important principle to apply in holding structures is that of ‘centralization of functions and services.’ This principle implies that certain corporate functions (such as finance, marketing, human resources, information technology, etc.) are managed at the holding company level rather than at the subsidiary level. This can increase efficiency, reduce costs by leveraging economies of scale, and allow for better coordination and oversight of activities across all companies in the group.
