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Defined in section 1159 of the Companies Act 2006 as a company holding a majority of the voting rights in another subsidiary company or having the right to appoint or remove a majority of the subsidiary company’s board of directors.
In practice a holding company is often established as a non-trading entity, holding assets such as shares, real estate and intellectual property rights and overseeing a group structure in order to attract various tax, corporate accounting and risk management advantages.
Note also the broader definition of ‘parent undertaking’ in CA 2006, s 1162 (and Schedule 7) which includes a power to exercise, or actually exercise, dominant influence or control over a ‘subsidiary undertaking’.
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Ordinary resolutions—checklist This checklist presents three key tables: • Resolutions specified as ordinary resolutions under CA 2006 • Resolutions which are commonly passed as ordinary resolutions, and • Ordinary resolutions which must be filed with Companies House Ordinary resolutions The Companies Act 2006 (CA 2006) specifies certain matters that must be effected by ordinary resolution (ie simple majority) passed by the members of a company, eg the removal of a director. CA 2006 also specifies certain matters which must be effected by special resolution of the company or where the relevant threshold for effecting a matter is 75%. Where CA 2006 states that something must be done by passing a resolution but does not specify what type of resolution, an ordinary resolution will be adequate (unless the articles of association specify any higher majority or unanimity). Note that: • anything done by ordinary resolution may also be done by special resolution, and • in addition to complying with the requirements of CA 2006 and the company's articles of association (which...
UK Solvency II—timeline This timeline shows key developments relating to the UK's Solvency II regime. For earlier developments see Solvency II—timeline (2007–2023) [Archived]. 2025 Date Source Document Description 10 April 2025 PRA Prudential Regulation Authority Business Plan 2025/26 The Prudential Regulation Authority (PRA) has announced its business plan for 2025/2026, outlining its strategic priorities and objectives. The strategy focuses on maintaining the safety and soundness of the banking and insurance sectors, identifying new and emerging risks, supporting competitive and innovative markets, and running an inclusive and efficient regulator. The PRA also mentions work it has already completed, ongoing and future initiatives. Key regulatory initiatives include stress testing in the banking and insurance sector, preparation for the implementation of the Basel 3.1 standards by January 2027 and enhancing operational and cyber resilience. 8 April 2025 PRA PRA launches consultation to help insurers accelerate investment in the UKCP7/25 – Matching Adjustment Investment Accelerator The PRA has published a consultation paper, CP7/25, proposing the introduction of a new framework called the...
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Performance security in construction This Practice Note examines the different types of performance security documents which are used on construction projects in the UK. It provides brief commentary on parent company guarantees, bonds (including performance bonds, advance payment bonds and retention bonds), collateral warranties, third-party rights, direct agreements and letters of reliance. It also considers provisions within construction contracts that provide performance security, such as payment security methods and performance guarantees. Parent company guarantees Parent company guarantees (PCGs) are often provided to an employer by a main contractor’s holding or parent company. In essence, if the main contractor defaults in its obligations under the construction contract, then the employer can seek recourse against the holding/parent company either financially or potentially in terms of performance if the parent company has sufficient resources to step in and continue the carrying out of the project in the main contractor’s stead. Theoretically, this recourse could also be used in the event that the main contractor is insolvent, although employers should bear in mind that...
Financial assistance—fundamentals Whenever any acquisition of a company’s shares is contemplated, careful consideration should be given as to whether the statutory prohibition on the giving of financial assistance applies. What is the prohibition on the giving of financial assistance? The Companies Act 2006 (CA 2006) prohibits: • a public company (or a subsidiary of it, whether a public or private company) from giving financial assistance directly or indirectly for the purpose of: ◦ the acquisition by a person of that public company's shares, whether the assistance is given before or at the same time as the acquisition takes place, or ◦ reducing or discharging a liability incurred for the purpose of acquiring that public company’s shares, where the shares have been acquired by a person (and whether or not the liability was incurred by that person or someone else) • a public company, which is a subsidiary of a private company, from giving financial assistance directly or indirectly for the purpose of: ◦ the acquisition by a...
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Ireland—Deed of assignment and conveyance—unregistered—freehold and leasehold Commencement Section 64(2)(a) of the Land and Conveyancing Law Reform Act 2009 (Ireland) (LCLRA 2009 (IRL)), provides that one of the criteria for establishing if a document is a deed is whether the document is described at its head with the appropriate wording such as ‘Conveyance’, ‘Assignment’, ‘Indenture’, ‘Deed’, etc. Date While it is usual practice to date a deed on the date of completion a deed actually takes effect on the date of its delivery. The concept of delivery means that it is possible for a deed to be valid even if it has not been dated. If a deed is not dated, external evidence is admissible to prove the correct date from which it was intended to operate. Where a date is inserted, it is presumed that this date is the date on which the deed took effect. However, this presumption may be rebutted by evidence to the contrary. See: Browne v Burton (1847) 17 LJQB 49 (not reported by Lexis+® UK). It is good...
Phantom share option agreement This AGREEMENT is made on [insert date of execution of the phantom share option agreement] Parties 1 [insert name of company whose shares are relevant to the phantom option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company); and 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) Background (A) The Company has agreed to grant to the Option Holder as at the date of this Agreement a Phantom Option on the terms set out in this Agreement. (B) The Phantom Option provides an entitlement to cash and not shares. 1 Definitions In this Agreement, except where the context otherwise requires, the words and expressions set out below will bear the following meanings, namely: Cash Payment • means the cash sum payable on the exercise of the Phantom Option, which shall be calculated in accordance with clause 6.2; Control • has the meaning given...
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Where a statutory corporation is a holding company and a subsidiary below it is a limited company, would the statutory corporation need to appear on a PSC register of the subsidiary limited company or does it fall outside of the requirements/guidance? A statutory corporation is likely to fall within Companies Act 2006, s 790C(12),
Following the merger of two companies, where there are concerns about the performance of a director of one of the subsidiaries, is it possible for the directors of the holding company to instigate the introduction of new service agreements and key performance indicators for the directors of both subsidiary companies, to include the right to terminate contracts based on performance? Where an employer is seeking to introduce new service agreements for existing directors, as for any employment contract, this will amount to a change in the terms and conditions of employment for those directors. Like any other contract, an employment contract or service agreement may be amended at any time either: • in accordance with the terms of the contract itself • with the agreement of the parties to the contract For information on the legal and practical considerations that arise when changing terms and conditions of employment, see: • Practice Note: Changing terms and conditions of employment • Checklist—changing terms and conditions of...
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This week's edition of Tax weekly highlights includes: (1) News Analyses on the FTT decisions in Eastern Power Networks, Moffat and Performance Leads, (2) HMRC’s new guidance on cost contribution agreements under the advance pricing agreement programme, (3) HMRC’s direction extending the deadline for making a final VAT return, (4) HMRC’s change of policy on VAT deductions in relation to the management of pension funds, and (5) HM Treasury’s policy paper on ‘Tax policy making principles’.
This week's edition of Share Incentives weekly highlights includes: (1) a focus on executive pay, as the AGM season continues and (2) a new Q&A which considers whether business asset disposal relief can be available where an EBT trustee is holding shares as bare trustee for an employee.
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