Ondřej Grygar: A holding company protects the business so it can prosper economically

Well-structured setups help family businesses leave nothing to chance. Lawyer Ondřej Grygar from the law firm Portos and senior consultant at CCS Premium Trust advises: “I recommend establishing a holding company when everything is running well, the business is doing fine, and has growth potential.” He explains how to properly manage assets and set clear boundaries between business and family ties.

What is essential when creating a holding structure?

First of all, it is necessary to gather all accounting and tax documents that the company has. Then, we analyze internal relationships, supplier relations, costs, and profitability of the companies. Next, we propose a holding model and options on how to diversify and optimize the current business activities.

Does a holding help reduce risk?

If a company operates in a broad spectrum of business — for example, owning real estate it rents out while also providing IT services — each activity carries its own risks. If these are not properly diversified into separate companies, a failure in one sector could threaten the entire business structure. That is why having a holding is beneficial. In case one company fails, another that is prospering can continue operating and growing.

What are other advantages?

A holding secures top management to ensure the operation of subsidiaries and enables easier and more comprehensive group management. Another benefit is intra-group financing, such as cash pooling. Instead of individual loans with interest between companies, the bank can open a cash pooling account, allowing companies within the holding to lend money to each other. This significantly improves management efficiency.

What are the experiences in Slovakia? Do companies have holding structures?

Usually, it’s the opposite. We more often see individuals owning multiple separate companies. Therefore, we generally recommend establishing a holding structure first and then considering further entities.

What about other cases?

Some clients already have functional holdings that need adjustments or better setups. For example, shares in a holding company can be transferred into a foundation to define specific benefits for beneficiaries.

Are there differences between Slovakia and the Czech Republic?

Yes, for example, in the length of holding periods. In the Czech Republic, a parent company only needs to hold at least 10% of a subsidiary for 12 months for capital gains from the sale to be tax-exempt. In Slovakia, this holding period is longer—24 months.

When do you recommend organizing family business ties via a holding structure?

Ideally, when everything is running smoothly. That is the best time to consider a holding, to diversify risks and possibly plan a fund structure, thinking about how the business will develop for future generations. It is more complicated if the holding is created as a protective measure after problems arise. Therefore, I recommend establishing holdings when the business is doing well and has growth potential, which also helps with better loan conditions.

Are there situations when you don’t recommend a holding structure?

Yes, for small businesses where it is more advantageous for the owner to operate as an individual. Also, if the business is not large enough to benefit from holding cash flows, or if the company does not plan expansion into foreign markets.

Is a holding a suitable tool to separate business activities from family ties?

Family ties are usually managed through a fund that owns the holding. The fund’s statute can define which family assets are preserved and passed down through generations. For example, a skilled manager without family ties may run the company, while the family retains fixed assets like real estate. This clearly separates business functions from family relationships.

What else can a fund offer, and why might a holding alone not be enough?

A fund preserves hierarchy for future generations. If the owner dies without a will, inheritance disputes and lengthy legal proceedings may arise, causing uncertainty about who will lead the company. A fund clearly defines succession rules, ensuring continuity.

Does a holding create more administrative burden?

The highest administrative burden and initial costs are at the time of setting up the holding. After that, operating costs usually decrease.

What are the main recommendations for companies before creating a holding structure?

Keep regular reporting and financial analysis to clearly understand how different business sectors are performing. Always separate real estate from riskier business activities.

What should companies not forget once they have a holding?

Review how the structure operates and how financial flows are set up. Check with banks about cash pooling financing and identify which companies in the holding are most profitable or most indebted.

What is the main benefit of incorporating a holding into a fund? Are there risks?

Besides tax advantages, the main benefit is clearly defining what happens to the holding when the owner or founder passes away. The fund’s statute can specify the future operation and benefits for descendants. Risks are minimal—mainly initial administrative costs, which are usually offset in the following accounting year.

Can you give practical examples of holdings integrated into funds?

A well-known recent case is a beverage manufacturing company that transferred its holding into a Liechtenstein foundation.

When to choose a Czech fund and when a Liechtenstein foundation?

It depends on the business portfolio and scope. Liechtenstein structures are suitable when the entrepreneur operates internationally, trading within or outside the EU. For businesses focused primarily on domestic markets, Czech options are generally recommended. The choice should always be tailored to the client’s interests and goals.

What if a fund manager fails in managing family assets?

In case of any breach, such as transferring assets contrary to the fund’s statute causing damage, the founder can seek compensation from the manager’s personal assets. Managers are usually insured, so compensation can be claimed from insurance. Legal mechanisms also exist to invalidate improper transfers and recover assets.

Your practical advice for better structuring companies and family relationships?

Always start by discussing the founder’s and family members’ visions for the family business. Define milestones and future goals to guide decisions about assets, holding, and potential fund setup.

This article titled We Know How was created in collaboration with a commercial partner on the website Trend.sk.