Define the position under review
The assignment begins with the proposed change and the entities it concerns. We establish which ownership interests, balances and agreements need to be considered for that question. The map covers the proposed transaction, rather than the continuing administration of every company in the group. Appointed local advisers determine the legal and tax implications.
The existing group chart is a starting point. We compare it with the available shareholding records, funding agreements and intercompany information. A diagram that shows legal ownership may say little about where cash must move or which party has a right to approve the proposed action.
Distinguish the relationships
- An ownership interest
- The holding and the rights attached to it, as described in the relevant records and documents.
- An intercompany balance
- A receivable, payable or funding arrangement between entities, including the source supporting its amount and terms.
- An approval dependency
- A consent or decision that may be needed before the proposed action, referred to the appropriate adviser for its interpretation.
As an illustrative distinction, a company may own shares in a subsidiary and also have lent money to it. The shareholding and the loan are separate positions. A proposed change to one should not silently be treated as a change to the other.
Keep the map traceable to its documents
Each material relationship should point to the record that supports it. If a chart and an agreement describe different positions, show the discrepancy for review. The map should not make an incomplete record look settled merely because it has been drawn neatly.
We can prepare a schedule of the balances, agreements and open questions relevant to the proposal. The client and its appointed advisers can then identify the documents still needed and the assumptions that require confirmation.
Examine the proposed movement
The commercial paper can show the intended movement of ownership or funding and the dependencies that remain. It can also distinguish a proposed step from a step already completed, so the analysis does not rely on the final structure before it exists.
The cross-border assignment scope describes our part in preparing that analysis. The final map should make it possible to follow each proposed movement back to the entity and document it concerns.
Related commercial notes
Contact Grafton about the company and proposal under consideration.