{"id":8958,"date":"2026-03-23T11:34:55","date_gmt":"2026-03-23T11:34:55","guid":{"rendered":"https:\/\/rfblegal.co.uk\/?post_type=insight&p=8958"},"modified":"2026-04-07T11:42:14","modified_gmt":"2026-04-07T11:42:14","slug":"qa-business-structuring-investment","status":"publish","type":"insight","link":"https:\/\/rfblegal.co.uk\/es\/perspectivas\/qa-business-structuring-investment\/","title":{"rendered":"Q&A: Business Structuring & Investment\u00a0"},"content":{"rendered":"

Q. What\u00a0is the difference between a limited company and a limited liability partnership?<\/strong>\u00a0<\/h2>\n\n\n\n

A limited company (Ltd or PLC) <\/strong>is the most common business structure in England and Wales. It is a separate legal entity from its owners (shareholders) and its managers (directors). The shareholders’ liability for the company’s debts is limited to the amount they have paid (or agreed to pay) for their shares. A limited company is governed by its articles of association and the Companies Act 2006. <\/p>\n\n\n\n

A limited liability partnership (LLP) <\/strong>is a hybrid structure \u2014 it has the separate legal personality and limited liability of a company, but it is taxed as a partnership (meaning the partners are taxed on the partnership’s profits directly, rather than the entity paying corporation tax). LLPs are governed by an LLP agreement rather than articles of association, and their internal arrangements are more flexible and private than a company’s. <\/p>\n\n\n\n

For professional services firms \u2014 solicitors, accountants, surveyors \u2014 the LLP is a common structure because it combines tax transparency with limited liability. For trading businesses, manufacturing companies and technology businesses, the limited company is almost invariably more appropriate, particularly given the availability of corporate tax reliefs and the relative ease of bringing in investors through share structures. <\/p>\n\n\n\n

The decision between the two should be made with careful input from both legal and tax advisers. <\/p>\n\n\n\n

Q. What\u00a0is a holding company structure, and why would I use one?<\/strong>\u00a0<\/h2>\n\n\n\n

A holding company structure involves creating a parent company (the ‘holdco’) that owns the shares in one or more operating subsidiaries (the ‘opcos’). The trading activity is conducted through the operating subsidiaries; the holding company sits above them and owns them. <\/p>\n\n\n\n

There are several reasons why businesses adopt a holding company structure: <\/p>\n\n\n\n

    \n
  • Asset protection \u2014 valuable assets (such as freehold property, intellectual\u00a0property\u00a0or cash reserves) can be held in the holding company or a separate subsidiary, insulated from the trading risks of the operating companies.\u00a0<\/li>\n<\/ul>\n\n\n\n
      \n
    • Tax efficiency \u2014 dividends paid up from a subsidiary to a holding company are\u00a0generally exempt\u00a0from corporation tax under the UK’s substantial shareholding exemption (subject to conditions). This allows profits to accumulate at holding company level before being deployed elsewhere.\u00a0<\/li>\n<\/ul>\n\n\n\n
        \n
      • Facilitating investment and sale \u2014 it is easier to sell a subsidiary (by selling its shares) or bring in investors at a specific operational level when the business is structured through subsidiaries rather than as a single company.\u00a0<\/li>\n<\/ul>\n\n\n\n
          \n
        • Multiple business streams \u2014 where a business has multiple distinct activities,\u00a0operating\u00a0them through separate subsidiaries provides clear financial separation and limits cross-contamination of liability.\u00a0<\/li>\n<\/ul>\n\n\n\n
            \n
          • Management equity \u2014 holding company structures\u00a0facilitate\u00a0the creation of management incentive arrangements (EMI options, growth shares) at the opco level.\u00a0<\/li>\n<\/ul>\n\n\n\n

            Q. What\u00a0is EIS and SEIS, and how do they affect investment in my company?<\/strong>\u00a0<\/h2>\n\n\n\n

            The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) are UK government programmes that provide significant tax reliefs to individuals who invest in qualifying small and early-stage companies. They are designed to encourage equity investment in private businesses by reducing the investor’s tax exposure on that investment. <\/p>\n\n\n\n

            Under SEIS <\/strong>(for seed-stage companies), investors can claim income tax relief of 50% on investments up to \u00a3200,000 per tax year, plus capital gains tax exemption on any gain on the sale of qualifying shares. SEIS is available to companies raising up to \u00a3250,000 in total (subject to conditions). <\/p>\n\n\n\n

            Under EIS <\/strong>(for growth-stage companies), investors can claim income tax relief of 30% on investments up to \u00a31 million per tax year (or \u00a32 million for knowledge-intensive companies), plus CGT deferral relief and CGT exemption on qualifying gains. EIS is available to companies raising up to \u00a312 million in total (subject to conditions). <\/p>\n\n\n\n

            Both schemes have detailed eligibility requirements \u2014 relating to the company’s size, age, trading activities, use of proceeds and the investor’s relationship to the company. Advance assurance from HMRC should be sought before marketing a fundraising as EIS or SEIS qualifying. The consequences of non-compliance can include clawback of relief from investors and significant reputational damage to the company. <\/p>\n\n\n\n

            Q. What\u00a0is a joint venture, and how should it be structured?<\/strong>\u00a0<\/h2>\n\n\n\n

            A joint venture (JV) is an arrangement by which two or more parties combine resources, expertise or capital to pursue a common commercial objective, while remaining independent of each other outside the venture. Joint ventures are common in real estate development, construction, technology licensing, market entry, and research and development. <\/p>\n\n\n\n

            There are two principal structures for a joint venture: <\/p>\n\n\n\n

            Contractual JV \u2014 <\/strong>the parties enter a joint venture agreement that governs how they will work together and share costs, revenues and profits. No separate legal entity is created. This structure is simpler and more flexible, but it can create questions about liability to third parties and about the tax treatment of shared activities. <\/p>\n\n\n\n

            Corporate JV \u2014 <\/strong>the parties establish a new company (the JV company) that carries out the venture activity. Each party holds shares in the JV company. This structure provides a clear legal separation from the parties’ other activities and is governed by a combination of the JV company’s articles of association and a separate shareholders agreement. <\/p>\n\n\n\n

            The shareholders agreement for a JV company is critical. It should cover: governance and decision-making (including reserved matters requiring both parties’ consent); funding obligations; profit distribution; what happens if one party wishes to exit; deadlock resolution; and the consequences of a party’s insolvency or change of control. <\/p>\n\n\n\n

            Q. What\u00a0legal documents do I need when setting up a new business?<\/strong>\u00a0<\/h2>\n\n\n\n

            The documents required will depend on the structure, size and nature of the business, but for most SMEs the following are the minimum legal framework that should be in place: <\/p>\n\n\n\n

              \n
            • Articles of association \u2014 all limited companies\u00a0require\u00a0articles. The standard Companies Act 2006 model articles are adequate for\u00a0very simple\u00a0structures but should be customised to reflect the specific governance arrangements of the business.\u00a0<\/li>\n<\/ul>\n\n\n\n
                \n
              • Shareholders agreement \u2014 essential for any company with more than one shareholder. Governs the relationship between shareholders, protects minority interests, and provides mechanisms for resolving disputes and\u00a0facilitating\u00a0exits.\u00a0<\/li>\n<\/ul>\n\n\n\n
                  \n
                • Service agreements for directors \u2014 employment contracts (styled as service agreements) for the company’s directors, including\u00a0appropriate restrictive\u00a0covenants, IP assignment provisions, and confidentiality obligations.\u00a0<\/li>\n<\/ul>\n\n\n\n
                    \n
                  • EMI option agreements \u2014 if you wish to incentivise key employees with equity, an HMRC-approved Enterprise Management Incentive scheme requires formal option agreements and a valuation agreed with HMRC.\u00a0<\/li>\n<\/ul>\n\n\n\n
                      \n
                    • Standard terms and conditions \u2014 for businesses that supply goods or services, a properly drafted set of terms and conditions is essential to manage liability, payment\u00a0terms\u00a0and dispute resolution.\u00a0<\/li>\n<\/ul>\n\n\n\n
                        \n
                      • IP assignment agreements \u2014 ensuring that intellectual property created by founders, employees or contractors is properly assigned to the company rather than\u00a0remaining\u00a0with the individual.\u00a0<\/li>\n<\/ul>","protected":false},"author":12,"featured_media":8959,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[65],"tags":[87],"class_list":["post-8958","insight","type-insight","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate","tag-richmond-office"],"acf":[],"aioseo_notices":[],"yoast_head":"\nQ&A: Business Structuring & Investment\u00a0 - RFB Legal<\/title>\n<meta name=\"description\" content=\"Q. 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