Operating Company Property Company Model - Explained
What is the Operating Company Property Company Model?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
What is the Operating Company/Property Company Model?
An operating company (OPCO)/property company (PROPCO) refers to an organizational model in which a property company, also called subsidiary company, and not the operating company (main company) has the ownership of all the properties that generate revenue or income. OPCO/PROPCO makes it easier for both firms to keep its finance-based and credit rating related problems separate.
How is the Operating Company/Property Company Deal Used?
OPCO or PROPCO deals are popular in the U.K. where a parent business firm can form a real estate income trust (REIT). A REIT deals with properties or real estate that generate income. Most real estate income trusts operate in a particular field. For example, healthcare REITs or office REITs. Usually, these REITS will offer rent payments collected as dividends to its investors. When the assets that have the potential to generate income are sold from operating organization to the subsidiary organization. Then, the operating firm gets its property back from the subsidiary firm. And gradually, the operating firm has the option of spinning off the subsidiary firm as a real estate investment trust. This helps the company in avoiding the issue of double taxation on the disbursement of income.
Operating Company/Property Company Deal: OPCO/PROPCO deal and parent firms
Parent firms can either be conglomerates or holding companies. Besides holding its primary operations, a conglomerate has the ownership of companies with different business structures. Whereas, a holding organization works with a view to hold a cluster of subsidiary companies, and refrains from carrying out its own operations. Holding firms are usually formed for earning tax advantages. Master Limited Partnerships or MLPs, being publicly traded most of the times, follow the same parent or subsidiary model. For instance, Linn Energy Inc. that comprises of both the MLP, LINE along with an entity having an interest in the MLP, LNCO. Considering the tax purposes, investors have the option of selecting the way they want to receive dividends generated by the company. A master limited partnership consists of a pass-through tax approach that states that all profits and losses of the company get passed through to its limited partners. The MLP has no liability for corporate taxes levied on its income, and therefore, helps most companies in avoiding the double taxation issues. It would be interesting to note that most MLPs can be seen in the energy sector. Subsidiary companies possess the ownership of the parent company MLPs shares, and redistribute the passive income in the form of dividends to its investors.
- Corporate Governance Law (Intro)
- What is Business Governance?
- Berle-Means Thesis
- Corporate Governance Rating Definition
- Who are the members of a corporation?
- Corporate Charter
- Shareholder Register
- Common Stock
- Preferred Stock
- Par Value
- Authorized Shares
- Issued Shares of Stock
- Unissued Shares of Stock
- Outstanding Shares
- Institutional Shares
- Dual Class Shares
- What is a closely-held corporation?
- Close Corporation Plan Definition
- What is a Private Company vs a Public Company?
- What is the role and purpose of the corporation?
- What is the Agency theory of corporate governance?
- Shareholder-Centric Perspective
- Shareholder Value
What is the Stakeholder theory of corporate governance?
What is the role & rights of Shareholders in the corporation?
- Shareholder Democracy Definition
- Quorum Definition
- Class Voting Shareholders
- Changing the Voting Rules
- Supermajority (Voting)
- Shareholder Sponsored Proposal
- What are the variations on attributes of Ownership structure?
- Stock Split
- What are the fiduciary duties owed by shareholders?
- When is a shareholder personally liable for corporate obligations?
- Appraisal Rights
- Dissenter's Rights
- Say on Pay Rights
- How can shareholder enforce their rights (direct and derivative actions)?
- What is the process for bringing a Derivative action?
- What are corporate vote Proxies?
- Proxy Statement
- Proxy Fight or Contest Definition & Explanation
- What is Shareholder Activism and the significance of Institutional Investors?
- Activist Investor
- Overview of Board of Directors
- Board Decision Making
- Advisory Board (Observer Directors)
- What is the role of the Board of Directors?
- Board of Trustees
- Board of Governors
- Outside Director
- Outside Director or Non-Executive Director Definition
- Independent Outside Director
- Budget Committee
- Audit Committee
- Compensation Committee
- Nomination Committee (Corporate Board)
- What standards govern the actions of the board of directors?
- Duty of Candor Definition
- Board Evaluation Definition
- What is the Business Judgment Rule?
- What is D&O insurance?
- Codetermination (Foreign)
- What is the role of Managers of the corporation?
- What standards govern manager actions?
- Chief Executive Officer (CEO)
- Chief Financial Officer
- Chief Information Officer (CIO)
- Chief Investment Officer (CIO)
- Chief Legal Officer
- Chief Operating Officer
- Chief Risk Officer
- Chief Security Officer
- Chief Technology Officer (CTO)
- What are the primary state and federal corporate governance laws?
- What is the role of the state in corporate governance?
- What is the role of Securities Laws in corporate governance?
- What is the role of the Foreign Corrupt Practices Act in corporate governance?
- What is the Sarbanes-Oxley Act (SOX) effect on corporate governance?
- Sarbanes-Oxley Act (SOX)
- What is the Dodd-Frank Wall Street Reform and Consumer Protection Act effect on corporate governance?
- Corporate Monitors
- What industry organization standards affect corporate governance?
- How do proxy advisory firms affect corporate governance?
- What is the role of ethics in corporate governance?
- What are the major causes of corporate governance issues?
- What are the access to information issues?
- What are decision-making structure issues?
- What are the power struggle or competition issues?
- Holding Company
- What are hostile takeovers and defenses to hostile takeovers?
- Williams Act
- Staggered Board
- Delay-Tactic Defenses?
- Legal Lockup Defenses?
- White Knight and Pac Man Defenses?
- Jonestown Defense
- Lady Macbeth Strategy
- Macaroni Defense
- Yellow Knight
- Back-end Plan Definition
- Backflip Takeover Definition
- Dead Hand Provision Definition
- Kamikaze Defense
- Operating Company Property Company Model
- Scorched Earth Policy Definition
- Revlon Rule
- What are benefit-alignment issues?
- Cadbury Rules Definition