The key characteristics of a FIC

Corporate Structure

Many FICs are incorporated as unlimited companies or limited companies, both have advantages and disadvantages. Privacy versus risk is the key consideration when deciding the structure of your company.

Share Classes

Typically we use alphabet shares to allow the family to tailor share classes so that the family can make the decision as to which share classes have voting, dividends, and entitlement to the capital on a winding-up or share sale.

Dividends can be declared to different shareholders at different times for varying amounts, giving tailored remuneration for the family.

Shares can have special rights to allow the value of certain shares to remain consistent, with the remaining shares benefiting from future growth in value. In most cases, this would go to the future generations.

Read: Protecting your family legacy

We explore how the Family Investment Company has become a popular choice for high net worth individuals as a useful tool for tax and family wealth planning with a flexibility that is hard to beat.

Control

Family members are free to manage the structure as they wish, so the board of directors is normally made up of family members.

Directors have day-to-day control of the company and these powers can be adapted through bespoke drafting in the articles of association and a shareholders’ agreement.

Protection

FICs can be set up to protect wealth from being lost as a result of threats like divorce, bankruptcy, or undue influence.

It is possible to restrict the identity of shareholders to bloodline descendants through the constitutional documents of the company (articles of association or shareholders agreements).

Activity

The activities of FICs are generally limited to holding investment portfolios or property interests.

It is not recommended to use a family investment company for owning assets used by family members (for example, holiday homes), since this can give rise to a number of tax issues.