Hi 🙂
I've searched high and low but so far no light has been shed on a possible answer to my question, so if anyone has any experience in this area, your insight would be most appreciated.
THE SITUATION:
I run a company that engages in 4 independent and sometimes overlapping areas of creative services. Currently each 'department' runs under its own 'brand' eg. JoBloPhotography and JaneDoeFilms. They all share the same assets, funds and costs for the time-being. It's all a perfectly valid system, and all I note in the invoices is JoBloPhotography services for ChowmeinCompany. Quite a number of factors influenced this decision, two of which being the financial and time costs of running each as a separate legal entity. Once the business of an individual 'department' expands sufficiently, the plan is to then make the current company one which owns the 4 different 'brands' as separate companies (and it would be a quick and easy process to do, it's just the daily costs of running them individually that are stalling atm). All of the brands have online visibility as independent businesses but have a disclaimer saying who actually owns them, eg. ChowmeinCompany.
THE PROBLEM
The issue arose when I was filling in a submission form for a film festival for our latest short and the field asked for "Production Company" - in my way of thinking technically speaking, the 'production company' is the legally registered entity that paid for the production, eg above ChowmeinCompany. However, using the eg above, "JaneDoeFilms" is the one actually credited in the film and is the brand it was made under.
THE QUESTION
Now every country has different laws, so am not really looking for comments on accounting or business structure intricacies and the like or a critique of the current structure ?;)?
My question or request for thoughts/insights is on the film-side, future productions, ownership, possible distribution issues etc...
As a generalisation how might putting JaneDoe Films in the festival submission form affect the future of the film, if at all?
Or do you know if there are any factors I should be considering in taking that decision?
Thank you in advance for your help! ?:)?
?:o)?
Hi ROx,
You're correct to note that optimum corporate structures are something that is very individual to the business' requirements and best discussed with accountants and/or lawyers who are familiar with your jurisdiction and needs.
However in general terms from a production perspective, it is common for most projects of any scale (e.g. features, TV series etc) to be run through its own separate legal entity. This often known as "Special Purpose Vehicle" or SPV. There are a multitude of reasons why using an SPV is the way it's done, but the main ones are to legally and financially ring-fence the project from other projects in the production company's slate. It's never a good idea to mix project finances and risk, with company finances and risk.
In your particular case, and assuming you're a small company, you're right to note that the administrative costs of running all of your divisions as separate legal entities makes it not worthwhile for now. You can still arrange the management of the divisions internally so they are 'separate' in how they report revenue etc. And at some point in the future, when it makes sense to do so, you can always spin one off into a wholly-owned subsidiary or with other partners.
The film festival question is largely irrelevant because at the end of the day, the film festival does not really care what the legal status of the production company is. Their only concern is that you have all the rights to make the submission. So if your company is called My Media Ltd and you operate your filmmaking activities under My Films, just put "My Films" as the production company on the submission form.
In terms of invoices etc for your divisions, that will depend on how your jurisdiction regulates trading names. Some jurisdictions require all trading names to be registered, where as others (e.g the UK) allow you to trade under a different name so long as the legal entity is made clear (i.e. A Company Ltd trading as Brand).
--
Benjamin Craig
Editor-in-Chief, filmmaking.net
--
Benjamin Craig
Editor-in-Chief, filmmaking.net
