A group of companies are business structures that are created to accomplish specific purposes. It comprises three or more associated companies with common shareholders or ownership. This company becomes the shareholder of the distinct "Group" or companies. In other words, it becomes the holding company.

A holding company is a parent company that holds more than 50% shares in another company. That company then becomes a subsidiary with a specified purpose, and it does not engage in any business activity of its own. The purpose of the holding company is to control, acquire assets and manage the affairs of the subsidiary company and not necessarily engage in the day-to-day activities.

A consortium is a union of different corporate entities, pulling their resources together to achieve a common goal, which is usually for a specific project, objectives, or specific duties. Each company is responsible for the consortium as specified or set out in the consortium agreement.

The consent of the Registrar General of the Corporate Affairs Commission (CAC) must be obtained to register a group of companies, holding company and consortium company.

  1. Evidence of payment of all annual return obligations by the subsidiary companies
  2. Obtain consent from the Registrar General, through name application and reservation.
  3. Evidence of the existence of 3 or more existing subsidiaries.
  4. Evidence of a resolution by each individual company consenting to the union.
  5. Statement that the share capital of the group shall not be less than the highest capital or any of the subsidiary company seeking to form the group.
  6. Compliance with section 733 of Companies and Allied Matters Act, 2020 (requiring certain companies to publish statement in prescribed form as in Fourteenth Schedule), these kinds of companies only include banks, insurance companies, deposit provident companies, benefit societies.
  7. Upon obtaining the consent, the group of companies can be registered with the same procedure for the registration of a new company.

Benefits of Holding Companies

  1. They enjoy protection such as limit in financial and legal liability. In the event its subsidiary company goes bankrupt, the bankrupt company's creditors cannot legally pursue the holding company for remuneration.
  2. Reduction in its overall tax liability by strategically basing certain parts of its business in jurisdictions that have lower tax rates.

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