Who actually owns a company? This question sounds simple but can be surprisingly complex. Behind the friendly LLC next door sometimes hides a web of holding companies, subsidiaries, and foreign investments.
In this guide, we explain how ownership structures work – and why you should understand them.
Why Corporate Structures Matter
Understanding corporate structures is relevant for:
- Sales: Who is the real decision-maker? Where does the budget sit?
- Due Diligence: What risks lurk in the corporate structure?
- Competitive Analysis: Who belongs to whom? What resources are available?
- Compliance: Who is the Ultimate Beneficial Owner (UBO)?
- M&A: How is the acquisition target embedded in the corporate group?
Basic Concepts of Corporate Structure
Shareholders vs. Directors
| Role | Function | Rights |
|---|---|---|
| Shareholder | Owner (holds shares) | Voting rights, profit share, sale rights |
| Director/Manager | Operational leadership | Representation, daily operations, bound by instructions |
A shareholder can simultaneously be a director (typical for founder-led companies) but doesn't have to be.
Ownership Percentages and Their Meaning
100% = Sole shareholder (full control)
> 75% = Qualified majority (can amend articles)
> 50% = Simple majority (operational decisions)
> 25% = Blocking minority (can block key decisions)
> 10% = Minority shareholder with information rights
< 10% = Small stake
Direct vs. Indirect Ownership
Direct ownership: Holding AG directly holds 60% in Subsidiary GmbH.
Holding AG
│
├── 60% ──► Subsidiary GmbH
Indirect ownership: Holding AG holds shares through an intermediate company.
Holding AG
│
└── 100% ──► Intermediate GmbH
│
└── 60% ──► Grandchild GmbH
Holding AG holds indirectly 60% in Grandchild GmbH (100% × 60% = 60%).
Typical Structures in Practice
1. The Simple LLC/GmbH
The basic form: One or more shareholders hold shares directly.
┌─────────────────────────────────────────┐
│ Shareholders │
├───────────┬───────────┬─────────────────┤
│ John Smith│ Jane Smith│ Bob Johnson │
│ 50% │ 30% │ 20% │
└─────┬─────┴─────┬──────┴────────┬───────┘
│ │ │
└───────────┼───────────────┘
▼
┌─────────────────┐
│ Example LLC │
│ │
│ CEO: John Smith│
└─────────────────┘
Typical for: Small and medium enterprises, trade businesses, service providers
2. The Holding Structure
One company holds shares in other companies without being operationally active itself.
┌─────────────────────┐
│ Holding GmbH │
│ │
│ (Administration, │
│ Financing) │
└──────────┬──────────┘
│
┌─────────────────┼─────────────────┐
│ │ │
▼ ▼ ▼
┌─────────────────┐ ┌─────────────────┐ ┌─────────────────┐
│ Operating Co. 1 │ │ Operating Co. 2 │ │ Operating Co. 3 │
│ │ │ │ │ │
│ (Production) │ │ (Sales) │ │ (IT Services) │
└─────────────────┘ └─────────────────┘ └─────────────────┘
Advantages of holding structures: - Liability separation between business units - Tax optimization (participation exemption) - Easier sale of individual units - Professional group management
3. The Family Holding
Private wealth management with family ownership:
┌─────────────────────────────┐
│ Miller Family LP │
│ (Shareholders' meeting) │
└──────────────┬──────────────┘
│
┌──────────────┼──────────────┐
│ │ │
▼ ▼ ▼
┌──────────┐ ┌──────────┐ ┌──────────┐
│ Son │ │ Daughter │ │ Mother │
│ 33.3% │ │ 33.3% │ │ 33.3% │
└────┬─────┘ └────┬─────┘ └────┬─────┘
│ │ │
└──────────────┼──────────────┘
▼
┌─────────────────────┐
│ Miller Holding LLC │
└──────────┬──────────┘
│
┌───────────────┼───────────────┐
│ │ │
▼ ▼ ▼
┌───────────┐ ┌───────────┐ ┌───────────┐
│ Real │ │ Operating │ │ New │
│ Estate │ │ Business │ │ Ventures │
│ LLC │ │ LLC │ │ LLC │
└───────────┘ └───────────┘ └───────────┘
4. The Corporate Group Structure
International companies with complex interconnections:
┌─────────────────────┐
│ Global Corp AG │
│ (Listed) │
│ 🇩🇪 Germany │
└──────────┬──────────┘
│
┌───────────────────────┼───────────────────────┐
│ │ │
▼ ▼ ▼
┌──────────────┐ ┌──────────────┐ ┌──────────────┐
│ Europe │ │ Americas │ │ Asia-Pac │
│ Holding BV │ │ Holding Inc │ │ Holding Ltd │
│ 🇳🇱 NL │ │ 🇺🇸 USA │ │ 🇸🇬 Singapore │
└──────┬───────┘ └──────┬───────┘ └──────┬───────┘
│ │ │
┌───┴───┐ ┌───┴───┐ ┌───┴───┐
▼ ▼ ▼ ▼ ▼ ▼
🇫🇷 FR 🇪🇸 ES 🇺🇸 US 🇧🇷 BR 🇨🇳 CN 🇯🇵 JP
SARL S.L. Corp. Ltda. Ltd. K.K.
Identifying the Ultimate Beneficial Owner (UBO)
The Ultimate Beneficial Owner is the natural person who ultimately controls the company. Identification is mandatory under anti-money laundering regulations.
Calculating Through Chains
Person A ──100%──► Holding 1 ──75%──► Holding 2 ──60%──► Target Company
Indirect ownership of Person A:
100% × 75% × 60% = 45%
Person A is a UBO (over 25%)
When Is Someone a UBO?
- More than 25% of capital shares (directly or indirectly)
- More than 25% of voting rights
- Control by other means (e.g., trusts, voting agreements)
If no natural person holds over 25%: Fictitious beneficial owner = Managing Director
Red Flags in Corporate Structures
Warning Signs to Watch
⚠️ Look closer when you see:
- Many intermediate companies without apparent operational purpose
- Companies in tax havens (Cayman Islands, BVI, Panama)
- Frequent structure changes in short time
- Circular ownership (A owns B, B owns A)
- Nominee directors instead of real decision-makers
- Trust arrangements without clear justification
Typical Obfuscation Structures
❌ Problematic:
Family X
│
└──► Trust (🇨🇭 Switzerland)
│
└──► Foundation (🇱🇮 Liechtenstein)
│
└──► Holding (🇨🇾 Cyprus)
│
└──► Operating LLC (🇩🇪 Germany)
Ask yourself: Why this complexity? What's being optimized – or hidden?
Practical Tips for Structure Analysis
1. Work Top-Down
Start with the ultimate owner and work your way down: 1. Who is the UBO? 2. What holding companies exist? 3. How are operational units connected?
2. Pay Attention to Ownership Levels
- Over 50%: Full control
- 25-50%: Significant influence
- Under 25%: Minority stake
3. Think Cross-Border
International structures often use different jurisdictions for: - Tax optimization - Liability limitation - Regulatory advantages - Capital market access
4. Monitor Changes
Structures change: - Before acquisitions - During succession planning - For tax optimization - During restructuring
Tools for Structure Analysis
Public Sources
- Commercial Register (Germany)
- Company Register (Austria)
- Transparency Register (UBO information)
- German Company Register (Unternehmensregister) (Group financial statements)
Challenges
- Information often fragmented
- International structures hard to trace
- Time lag in registry entries
- Fee-based queries
Conclusion
Understanding corporate structures isn't rocket science – but it requires systematic approach. With the knowledge from this guide, you can:
- Identify owners and control relationships
- Understand group structures
- Recognize red flags
- Determine the beneficial owner
Tip: With Firmium, you visualize ownership structures at a glance. Our network analysis shows you connections between companies and people – without tedious registry queries. Analyze corporate network now →