How to Start a Conglomerate Corporation
A conglomerate is a group of businesses in unrelated industries that operate in cooperation with each other within a single corporation. Since it is a lot easier to start a corporation than to create and maintain a number of viable businesses, most conglomerates are formed through merger with other corporations. Conglomerates are advantageous in part because the single corporate umbrella allows different businesses to unify and simplify tax, legal and accounting procedures.
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Instructions
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Select a corporate name that is not already being used in your chosen jurisdiction. Most jurisdictions allow online searches of available corporate names. All jurisdictions restrict the potential choices--a corporate name must indicate limited liability, for example, and cannot misleadingly indicate that it is a government entity.
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Choose shareholders, directors and officers of your corporation. You must also select a registered agent (the person who is appointed to receive legal notices on behalf of the corporation) and a registered address.
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Draft Articles of Incorporation and file them with the appropriate official in your chosen jurisdicition. You will be required to list officers, shareholders and directors as well as the registered agent and registered address. In most US states, Articles of Incorporation should be filed with the Secretary of State. You will have to pay a filing fee of up to several hundred dollars in order to incorporate.
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Draft corporate bylaws--the constitution of your corporation that determines how it will be run. Check the corporate law of your jurisdiction to ensure that none of its terms violate the laws of the jurisdiction. In most jurisdictions, corporate bylaws do not have to be filed with the authorities.
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Develop a viable, cash-generating business, It is usually best to concentrate on a single industry at first.
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Seek out another corporation that operates in a different industry, and offer to complete a corporate merger. A merger is a complex legal procedure in which two corporations combine to form a single "surviving corporation". Create two divisions in the surviving corporation--one for the business of your pre-merger corporation, and one for the business of the corporation that merged into yours.
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Consolidate redundant departments within the surviving corporation. These should include tax, legal, accounting and human resources departments along with any other corporate departments or divisions that are redundant in the surviving corporation. This will likely result in a significant number of layoffs and reduced administrative expenses.
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Continue the process of merging corporations in different industries into your corporation, creating new divisions for different entities, and consolidating redundant departments.
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Tips & Warnings
Consider globalizing by establishing overseas branches or subsidiaries. Many countries allow overseas branches of foreign corporations, and some allow overseas corporations to form local subsidiaries.
It might be tempting to opt for separate corporations for each business, with cross-shareholding to unify authority, in order to protect the assets of one business from the liabilities of the others. Such a structure, however, will not only greatly complicate tax, legal and accounting procedures, but will also run the risk of violating anti-trust law.
References
Resources
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