Types of holding companies
In the mind of the 1929 legislators, a ‘financial participation company’ may include all types of capital concentration with as sole restriction the banning of all commercial activity. As shareholding acquisitions may be made ‘under any form whatsoever’, various kinds of institutions which may not necessarily have the same econorrric characteristics are concemed.
New applications have been added to those traditional provided for in the 1929 Act further to a flexible interpretation of legislative provisions by Luxembourg national authorities.
It has therefore always been accepted that holding companies could carry out the following activities, whether · such activities are independant or concurrent:
This type of company (a controlling company), by acquiring holdings in other companies seeks to exercise control with a view to directing, coordinating and rationalizing their various activities, without thereby directly or indirectly taking part in the conduct of the business of the subsidiary.
– Launching of newly created companies
Launching companies, by underwriting the shares of a newly establishedcompany, facilitate its initial phase, and several years later sell the shares when the company is sufficiently well known among the public to interest private investors.
– Patent Management
Patent companies manage and exploit exclusively by granting licences to subsidiarles and third parties, a portfolio comprising intangible assets (patents).
A holding company may furthermore hold a trade mark but it may only grant a licence in retum for payment to group subsidiaries. Nevertheless, a holding company may not hold in its portfolio rights that have not been patented such as know-how, franchises, ideas, designs and models.
Investment companies ( or placing companies) create and manage on their own behalf a portfolio of transferable securities for one or more private individuals in accordance with the principles of private management ( risks are distributed geographically and amongst various sectors). It is particularly suitable for the centralized management of family assets,
particularly in cases of succession and property held ‘pro-indivisum’.
Subsequently, the activities of holding companies were enlarged to include notably financing activities by decisions taken by the Ministry of Finance (Registration and Estates Departments)