In this episode, Partner Rodney Craig from our Corporate and Commercial team talks to Partner Jane Parker from our Technology practice, who specialises in commercial contracting.
Rodney and Jane focus on one important structural consideration that can make a growth journey easier for start-ups: whether to include a holding company in the initial corporate structure.
[1:07] Rodney and Jane start out by discussing why companies are often the structure of choice for beginning entities. They run through the benefits under the Companies Act and how it helps shareholders.
[2:30] They introduce the concept of the holding company, and how this works alongside an operating company. They discuss which entity will raise capital, and which enters into relationships with customers and suppliers.
[4:45] They also look at the shareholders agreement, covering pre-emptive rights, major transactions and how the documentation might be set up to cover a series of rounds of capital raising. They then discuss how having a holding company can lessen the impact of shareholder issues on the operation of a business [8:30].
[12:37] Rodney and Jane discuss how a holding company can help with asset protection, and how intercompany legal arrangements might look for allowing the use of assets like IP. They also talk about the administration of two companies, and how this can be managed.
[16:09] Finally, they talk about the exiting process and how having a holding company structure can help or hinder an exit or liquidity event. This includes a discussion of drag-along rights and points to consider to provide a buyer with more certainty against getting “gazumped”.
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