Family holding company: advantages and disadvantages

A family holding company is a model of society created for the management of other companies, bringing together several assets in one place. Its main objective is asset protection, contributing to succession planning.

The model, existing in several legal systems, appeared in the country through Law No. 6,404, traditionally known as the Corporations Law. This diploma establishes in its art. 2nd, § 3rd that “the company may aim to participate in other companies.”

In this guide we will talk about the advantages and disadvantages of this instrument of succession. Find out what are the benefits brought to those involved and what precautions should be taken when choosing the regime.

What is family holding company?

Family holding is a company whose main objective is the organization of the assets belonging to the family. In this way, all assets and patrimony that are part of the equity are managed jointly.

In addition to Law No. 6,404, referred to as one of the first diplomas to deal with the instrument, the Civil Code also justifies its application. Art. 977 stipulates that spouses may hire a partnership, either between themselves or with third parties.

In theory, the family holding company can materialize in the form of any type of corporate law. It is important to highlight that the holding company does not configure its own corporate type, but rather a corporate object implemented by a company.

Advantages of the family holding company

The creation of a family holding company is justified due to the various benefits that this instrument offers. One of them concerns the inheritance succession, considering that it allows the division, in advance, of the family patrimony.

This advantage is reinforced by the possibility of including clauses aimed at protecting against the dilapidation of assets. Reference is made, notably, to the terms of incommunicability, unenforceability and inalienability.

In addition, it is possible to clearly define which assets belong to each of the heirs, in order to make the inventory and sharing unnecessary. This is one of the major reasons that lead to the creation of a holding company.

Another clear benefit of the family holding company is the protection of its assets. With its constitution, the company’s equity is dissociated from the shareholders’ equity, which avoids its constriction due to the demands of third parties.

Only in exceptional cases, through the incident of disregard of legal personality, is it possible to reach the shareholders’ equity. Thus, the formation of the holding company works as a kind of defense mechanism.

In addition to all the benefits mentioned above, the family holding also contributes to tax planning.

By virtue of art. 23 of Law No. 9,249 / 95, individuals can transfer assets and rights to legal entities, at the value contained in the respective declaration of assets or at market value.

Disadvantages of the family holding company

The family holding company presents a series of benefits, in particular the protection of family assets. The instrument has legal and practical validity, insofar as it guarantees the expected results.

However, the model is not the ideal solution for all cases. The analysis on the creation of a family holding company, in this sense, should be done on a case-by-case basis, based on reality.

Thus, for the creation of a family holding company, technical analysis by specialists with deep knowledge and expertise in this area is essential. So, it is possible to make a safe and responsible decision.

The lawyer specialized in Corporate Law can analyze the implications of the adoption of the family holding company, in addition to assessing the legal viability based on the pertinent aspects of the specific case.