Resurgence of Corporate ReorganisationsPublished on: 12 January 2018
The New Year rush shows no signs of abating, with another busy week having just passed. This week I have been working with clients on a number of interesting corporate and commercial arrangements.
In particular, I have been assisting a client with the implementation of an intellectual property rights licence agreement. The client’s group is involved in the development of certain intellectual property rights relating to the renewable energy sector (some of which have been patented). As part of a new business venture, the client wishes to exploit some of these ideas and bring them to the market. Of course, one of the client’s key concerns is to ensure that its intellectual property rights are protected from the trading risks associated with this new business venture.
For this reason, we have decided to implement a group structure with a parent company owning and licensing the relevant intellectual property rights to its wholly owned subsidiary. One of the key benefits of having a non-trading holding company in place above of a trading subsidiary is that the holding company’s assets are ring-fenced from the ordinary trading risks and liabilities of the subsidiary. This concept can also be extended beyond intellectual property rights to other critical assets, such as commercial premises, goodwill and, perhaps most importantly, cash reserves. Of course, often lenders and other creditors will seek to curtail the benefits of this structure by requiring intra-group guarantees and other security; nonetheless, it is always worth exploring whether or not such a group structure is of benefit to a particular business.
My department has seen a resurgence of corporate reorganisations in the last 12 months or so, with clients looking to take advantage of the benefits discussed above, and we expect this trend to continue throughout 2018.