A corporation's status as a conglomerate comes from the way the corporation operates, not the way it is formed. A conglomerate corporation is formed the same way as a regular corporation. The newly formed corporation will acquire or form other corporations and own them as subsidiaries. Typically, the conglomerate seeks to hold subsidiary corporations across many different industries. This diversification of business interests protects the conglomerate from market fluctuations that affect the value of any single subsidiary company.
Select a name for your conglomerate corporation. The name must be unique and not in use by any other company. Use an Internet browser search to locate a name that seems available. Check domain name databases to locate available website names. Your proposed business name must be available in the jurisdictions where you plan to register the corporation and operate. Conglomerates typically operate nationally or internationally, so it is important to choose a name that does not seem to be in use.
Read More: The Differences Between Transnational & Conglomerate Corporations
Access the website for the secretary of state or other business registrar for the state where you want to register your conglomerate. Pick a state with a favorable business climate for corporations that plan to own subsidiaries. Some states, such as Delaware, have the type of business code that makes it easier for businesses with national or international interests to operate.
File articles of incorporation with the secretary of state or other state business registrar. Download a PDF template of the articles from the state website. Fill out the information requested. Most states require new corporations to indicate the name and address of the corporation, a registered agent and the person filing the paperwork. Indicate the initial number of shares the corporation is authorizing. There is nothing special that a conglomerate corporation needs to include in the articles. Submit the completed form to the state office with the appropriate filing fee. You corporation exists as an authorized entity when the state accepts the articles.
Draft corporate bylaws. Authorize the corporation in the bylaws to form and acquire subsidiary companies. Establish a procedure for voting on prospective acquisitions. Organize the affairs of the main corporation in a way that will make it possible to manage separate independent business entities under the umbrella of a single headquarters.
Acquire or form subsidiary companies. Transfer the stock or other ownership interest in the subsidiaries into the name of the parent conglomerate. Change the subsidiaries' official registrations with their home states to indicate the change in ownership. The parent corporation can own the subsidiaries in whole or in partnership with other entities. Once the corporation you formed owns a subsidiary, it is technically operating as a conglomerate.
Structuring the relationships between the main conglomerate corporation and its subsidiaries is a complex matter that can have significant legal, accounting and tax consequences. It is advisable to consult a corporate or tax lawyer or an accountant before completing acquisitions.
Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995, specializing in business topics, personal finance, taxation, nonprofit issues, and general legal and marketing content creation for the Internet. Terry holds a Juris Doctor and a Bachelor of Science in business administration with a minor in finance.