Case study: Strengthening the substance of a Dutch holding for a Ukrainian group (bank comfort + deal readiness)

Client situation

A Ukrainian group (export revenue, EU counterparties) set up a Dutch holding company (NL HoldCo) as the top ownership layer. The objective was straightforward: a familiar jurisdiction for banks/investors, controlled dividend flows, and a platform for a future transaction (minority sale / capital raise).

The risk surfaced once the structure became subject to scrutiny:

• the bank requested enhanced KYC/SoF/SoW and asked “who actually makes decisions”;

• a prospective investor/buyer flagged that deal readiness starts with governance and structural resilience;

• internally, the group lacked confidence that the NL HoldCo would pass a substance test beyond paperwork.

Why it matters now

In practice, substance is no longer a tax-only concept. The same holding is assessed by:

• tax authorities (economic rationale, factual functions, decision-making),

• banks (KYC/AML, de-risking, sources of funds/wealth),

• investors (DD: structure risk translates into discounts, covenants, warranties, escrow).

Diagnosis: what made the NL HoldCo “weak”

1) Governance

• directors were largely formal, with limited evidence of involvement in key decisions;

• board meetings and minutes were irregular or lacked substance (“what/why/how decided”);

• no clear delegation of authority or decision chain.

2) Functions and economics

• the HoldCo had no clearly defined, actually performed role (treasury, IP, risk control, M&A hub, etc.);

• intercompany arrangements were missing or misaligned with real flows and value creation;

• weak business rationale: “why NL exists”.

3) Presence and operations

• address/office looked like a mailbox rather than an operating footprint;

• no operational backbone (admin processes, accounting discipline, compliance calendar, archive);

• insufficient “evidence trail” for bank onboarding and DD.

Our approach at LigLex

We treated this as transaction support and structuring, not as cosmetic “bank-ready documents”.

Step 1. A 3-in-1 substance audit (tax + bank + investor)

We assessed the HoldCo across:

• Functions, People, Premises, Evidence, Flows.

Output: a prioritized gap list (critical / important / optional) and a Target Operating Model for the NL HoldCo.

Step 2. Strengthening directors and real decision-making

We ensured decisions genuinely sit at the NL level and can be evidenced:

• reinforced the board composition (capability fit, availability, independence where relevant);

• implemented a board calendar (regular cadence, agenda discipline, quorum, rationale in minutes);

• introduced Delegation of Authority (what must be decided/approved at HoldCo level).

Step 3. Making the HoldCo’s role real

We anchored practical functions aligned with how the group actually operates (example):

• group treasury / financing governance (liquidity oversight, lending policy, limits),

• M&A / investment hub (decision center, documentation ownership),

• oversight of key contracts and risk approvals.

Step 4. Office and operational backbone

We established proportional presence without over-engineering:

• suitable office format (dedicated office or serviced office, depending on the model and facts);

• document management, corporate archive, accounting workflow, compliance deadlines;

• clear ownership (RACI).

Step 5. Substance Evidence Pack

A single, coherent pack for the bank and for DD:

• corporate governance documents, policies, board materials and minutes;

• intercompany agreements + evidence of performance (deliverables, invoices, correspondence);

• flow logic and consistency with the operating model;

• a structured SoF/SoW narrative suitable for KYC.

Outcome: risk, bank interaction, deal readiness

Risk: fewer grounds to view the HoldCo as an empty layer; governance became evidence-based.
Bank: fewer onboarding iterations; clear narrative on who decides what and why.
Deal readiness: fewer governance/intercompany findings in DD; fewer levers for “structure discount”.

Note: This is an anonymized case; details are generalized and rounded. Tax outcomes and applicability of specific tests depend on facts and on current bank/regulatory expectations.

Before/After (how banks and investors read it)

Practical checklist: 12 building blocks of a resilient NL HoldCo

1. Clear HoldCo role in the group (1–2 pages).

2. Realistic functions assigned and executed.

3. Capable directors with a defensible appointment rationale.

4. Board calendar + substantive minutes.

5. Delegation of Authority and limits.

6. Intercompany agreements aligned with real flows.

7. Proof of performance (deliverables/invoices/correspondence).

8. Office/operational setup consistent with the model.

9. Corporate archive (cap table, UBO, org charts, key contracts).

10. SoF/SoW narrative and a structured KYC pack.

11. Financing/dividend/risk policies (as needed).

12. A DD-ready folder deliverable within 24–48 hours.

Conclusion

Substance is a system: people, functions, processes, and evidence that withstand scrutiny from tax, bank, and investor angles. Our job is to make the Dutch holding a controlled, auditable governance layer—not a point of uncertainty.

If you have an NL (or any EU) holding and you are preparing for a transaction or bank onboarding, we can run a 3-in-1 substance audit and provide a prioritized strengthening roadmap.

#Substance #Holding #Netherlands #Structuring #Liglex