State Holding Company
To carry out a significant portion of the plans devised by the State Partners (SP), SCC and the SP need to form a legal entity that would function as a “holding company”, i.e., an entity whose primary business is holding a controlling interest in other companies. This holding company would be 100% owned and controlled by the SP.
The recommended form would be an LLC incorporated in that state wherein the articles of organization of that LLC define it to be organized as a non-profit entity, under IRS 501(c)(4). As the SP own half (100%) of that LLC it will receive all the net revenues generated under the SHC, and have ownership of any projects, subsidiaries, etc. established under the SHC (“Assets”).
A standard holding company can own any type of subsidiary except for a bank. It can own a bank holding company that owns one or more banks, but not a bank directly. A corporate entity that owns a bank is usually defined as a “bank holding company” (BHC) and has special rules that govern it (primarily under the Federal Reserve – “FED”). Bank holding companies may only own banks.
Thus the assets of the State Holding Company will be in two categories – a BHC for one or more banks in one category and all other assets in a second category.
There is a special category of bank holding companies called (“financial holding company” (FHC) that may own banks and other types of financial institutions (insurance, securities, investment advisory services, etc.), but no other kind of company. Thus, the inclusion of a BHC, if required by the FED to separate banks owned by this state ecosystem from the other types of organizations.