Reorganisation of the legal structure
As described earlier, indirect ownership arrangements and quasi-holding structures are typical for many companies. For the foreign public investors, often separated from the company by thousands of miles and even greater cultural distance, investment in such companies is unfeasible. As a result, the investors are either unprepared to offer equity funding to the company OR can only invest at a significant discount to the true, “intrinsic” value of the business.
Therefore, the ultimate holding company should consolidate those companies of the group whose inclusion has a material impact on the consolidated financial results and/or is necessary for operational reasons. Substance and the optimal sequence of reorganisation depends on the specifics of each case and is reflective of the tax, financial and legal consequences for the group’s companies and their owners in respective countries.