Hiving up and hiving down

What is a hive up or a hive down?

Hiving up and hiving down are corporate restructuring techniques used to reorganise business assets and liabilities within a group of companies.

• Hiving up - involves transferring assets and liabilities from a subsidiary company to its parent company.

• Hiving down - transferring assets and liabilities from a parent company to a newly formed subsidiary company.

Benefits to hiving up or down

• Simplified corporate structure - by transferring assets and liabilities between companies, businesses can streamline their operations and reduce administrative costs.

• Tax efficiency - careful planning can lead to tax advantages, such as deferring or reducing tax liabilities.

• Protecting assets - segregating assets and liabilities can protect the parent company from potential risks associated with the transferred business.

• Making inward investment more attractive - by creating a separate legal entity, businesses can make it easier to attract investors or secure financing for specific projects or divisions.

• Preparing for sale or acquisition - hiving down a particular business unit can make it more attractive to potential buyers.

Commercial considerations and potential complications

• Tax - each type of transaction requires careful tax planning. The wrong structure could trigger unnecessary tax charges or lose valuable tax attributes.

• Consents and buy in - board approval and possibly shareholder consent needed. Assets must be legally transferable. Customers, suppliers, and employees need careful communication to prevent disruption to business relationships.

• Employee issues - TUPE regulations often apply when transferring a business, meaning employee rights must be protected and proper consultation conducted.

• Contract issues - existing contracts need reviewing to check if they allow transfer or require third-party consent. This includes leases, licenses, and customer agreements.

• Valuation issues - determining the correct value for transferred assets can be complex, especially with intangible assets or ongoing businesses.

Contact us

A hive up or hive down is a complex legal process. It is essential to seek experienced legal advice to ensure compliance with all relevant laws and regulations. We can guide you through the process and help you achieve your business objectives.