Legal entity reduction

Over time, most successful groups naturally become larger and more complex, whether through acquisitions or organic growth. The result is often that the group includes many companies and legal entities that are not contributing anything significant. This makes auditing more difficult and creates various legal and regulatory risks. So from time to time it is necessary to remove some legal entities from the group.

Perhaps the most important aspect of such projects is internal communication. Everyone affected needs to understand the project objective and how it benefits both them and the group. As we have considerable experience of legal entity reduction projects, we can help clients to identify potential problem areas like this, and deal with them before they can hinder the project or even completely derail it.

It’s essential to start with the due diligence: understanding the current legal structure, and the various risks and liabilities that exist. But it’s also critical to avoid getting swamped in detail. It’s a really important skill to know when to stop this part of the process.

If you keep on investigating the detail endlessly then the project won’t progress. One of the ways to get this right is to set a ‘materiality threshold’ – for example, that companies under a certain value will definitely be eliminated. (This can also help with the internal communication aspect.)

Equally, you need to do enough due diligence to spot potential problems, such as invalidating anti-compete agreements or making them unenforceable; or removing an entity which is on an approved supplier list, thereby creating procurement problems. These are just two common examples. A wide variety of hidden assets can provide huge value, and must therefore be noticed and protected.

The solution is to have a carefully structured plan, and to bring the necessary expertise to carry it out successfully.

Why work with us?


We are the world-leading experts and educators in intercompany agreements and related corporate structures.

Global and

We liaise with all the stakeholders involved, not just in tax, to ensure that the intercompany agreements and legal structures we maintain support all of the group’s objective.

Ongoing support
to maintain

We provide an outsourced management service for multinational groups, to ensure that their intercompany agreements are maintained in a tax-audit ready central archive.

I worked with Paul Sutton for many years whilst he was at McGrigors / Pinsent Masons, in my role as Group Tax Manager of Sumitomo Electric Wiring Systems (Europe) Ltd (SEWS-E Ltd), and also for a period as SEWS-E Ltd Company Secretary. In this time I had extremely valuable assistance and advice from Paul, not only as regards general corporate law matters, but also particularly across a wide spectrum of legal aspects of SEWS-E Ltd group transfer pricing policies, implementation, inter-group agreements and legal compliance.

Martin L Kinsey, Group Tax Manager
Sumitomo Electric Wiring Systems (Europe) Limited

I have worked with Paul and his team in structuring significant Corporate Debt and have found his approach to be commercial, pragmatic and measured. I would have no hesitation working with Paul again, as we value his commercial and responsive approach.

Joanne Luce, Director
Acqua Trust Company Limited, Jersey

All-Fill Inc, a US based manufacturer of packaging machinery, has had the distinct pleasure of working with Ivan Hanna and the LCN Legal team in relation to our overseas acquisition projects. Ivan has displayed patience and intricate knowledge of English law as it applies to us as a foreign company. Ivan’s counsel has been calculated and sound, together we tailored an approach that is telling of our company’s aggressive nature. I was most impressed at Ivan’s willingness to dig deep into the details and investigate any way to give our side a competitive advantage while negotiating. Ivan has been our guiding light since our initial engagement.

Ryan Edginton, President & CEO
All-Fill Inc

I have been working with Ivan Hanna over the past year on various corporate matters including a group share restructuring project and intercompany agreements for our transfer pricing compliance. Compared to other corporate law firms I have worked with, Ivan took the time to understand our business, our stakeholders and my needs. He was incredibly responsive and went above and beyond to manage our various stakeholders and turn around a big piece of work in a short amount of time. I have no hesitation in recommending Ivan or LCN Legal – they are what all solicitors should be!

Becky Karver, CFO
Deallus Consulting

It is my privilege to recommend Ivan. He is able to process requirements quickly and formulate an effective strategy that protects one’s commercial interests. He is very personable and exceeds expectations. A great lawyer!

Roop Singh Sood, Executive Producer
AKA Filmworks

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