How did group 64.2 split?

Group 64.2, activities of holding companies and financing conduits, split into two classes in NACE Rev. 2.1: class 64.21, activities of holding companies, and class 64.22, activities of financing conduits. Paragraph 175 of the manual states the split. The group note states that the two kinds of unit are captive financial entities of corporate groups. The split does not determine a code for a specific reader.

What does the group note state about the two kinds of unit?

The explanatory note for group 64.2 states that the group includes the activities of holding companies and financing conduits, which are corporate groups captive financial entities, in other words units created by a financial or non financial group to fulfil specific financial activities, and whose main activity is, respectively, to own the group or to act as a vehicle to arrange and channel funds within the group. The note adds that units in groups 64.2 and 64.3 usually do not have revenue from the sale of products, nor employ staff, and that they are integrated in the classification to facilitate the classification of units in statistical business registers. The register purpose is stated in the note itself, and it explains why units with no sales and no staff still receive a class.

The group note also states exclusions that apply to the group as a whole. Captive factoring and invoicing companies are excluded to class 64.92. Own account investment activities, for example by venture capital companies and private equity firms, are excluded to class 64.99. Active management of companies and enterprises, strategic planning and decision making, is excluded to class 70.10. Other activities of corporate groups captive financial entities are captured under the relevant activity classes. The exclusions show that the group is not a general container for group finance work. It holds the two captive entity kinds named in the title, and the notes for the two classes draw the line between them.

What does each new class contain, according to its note?

Class 64.21 includes the activities of holding companies, in other words units that hold the assets, owning controlling levels of equity, of one or more subsidiaries, and whose only purpose is owning subsidiaries. The note adds that the holding companies in the class do not provide any other service to the enterprises in which the equity is held, in other words they do not administer or manage other units. The note excludes activities of shareholding companies not owning controlling levels of equity to class 64.32, dealing in financial markets on own account to class 64.99, asset management on a fee or contract basis to class 66.30, and provision of managerial services, including strategic planning, decision making and administrative services of a head office, to class 70.10. The controlling level of equity and the absence of other services are the two tests in the note.

Class 64.22 includes the activities of financing conduits, in other words units created by a financial or non financial group to raise or borrow funds, often on the open market, and to remit those funds to their parent or another entity within the group. The note is short, and it states the conduit function in a single sentence: raising or borrowing funds, and remitting them inside the group. The brevity of the note does not make the class a general container for borrowing. The group exclusions above, and the notes for the neighbouring classes in division 64, state the boundaries, and the note for class 64.22 must be read with the group note, not alone.

How is the split shown?

| NACE Rev. 2.1 class | Title in the manual | Test in the note, in short |

|---|---|---|

| 64.21 | Activities of holding companies | Owning controlling levels of equity, only purpose owning subsidiaries, no other service to the enterprises held |

| 64.22 | Activities of financing conduits | Raising or borrowing funds, remitting them to the parent or another entity in the group |

The table follows paragraph 175 and the notes for the two classes. The third column summarises the tests in the notes, in short form, and it does not replace the notes. The full notes, including the exclusions quoted above, must be read before either class is quoted. The correspondence table records how the old group content relates to the new classes, and it must be read with the notes.

What does a split not decide?

A service split is a change in the published categories. It is not a decision about a specific unit. Scopes for a change from one old group or class to two or more new classes sit in the correspondence table, and inclusions and exclusions sit in the explanatory note for each new class. Neither document picks a new class for a specific unit. The classification is statistical only. Confirmation of the entry for a specific unit comes from the institute or register holding the record, not from the classification, which decides no tax, licensing, social security, collective agreement or funding matter.

Where is a split class confirmed?

The check for a split class runs in three steps. First, the section 4 summary in the manual for the change as adopted. Second, the explanatory notes for the new classes, for inclusions and exclusions. The third check is the institute or register for the entry actually held. This guide gives the first step and points to the other two.

Apply the controlling equity test for holding companies and the conduit test for financing conduits, read both notes with the group note, and confirm the entry with the institute or register that holds it.