A hive of activity – hive ups and hive downs

Posted: 23/09/2025

In the context of group reorganisations and corporate simplifications, hive ups and hive downs are common techniques used to transfer businesses or assets between group companies. These mechanisms require careful planning to ensure that legal, regulatory, tax and commercial considerations are properly addressed.

This article looks at the key legal considerations and potential pitfalls from a corporate legal perspective.

What is a hive up?

A hive up involves transferring a business or assets from a subsidiary to its parent company. This may be done to:

• streamline the group structure;
• eliminate dormant or redundant entities;
• centralise operations or assets;
• facilitate a future sale or exit.

A hive up can be implemented by way of an asset transfer or business transfer agreement.  
Key legal considerations for a hive up include:

• transfer mechanics – ensuring proper title transfer for assets, contracts and employees (where applicable);
• third party consents – many contracts may require counterparty consent to assignment or novation;
• employment law compliance – TUPE or similar employee transfer rules may apply;
• regulatory approvals – sector specific licenses or approvals may need to be updated or re-applied for.

What is a hive down?

A hive down is the reverse process and involves transferring a business or assets from a parent company to a newly formed or existing subsidiary.

This is often used to:

• ring fence liabilities or risks;
• prepare a business unit for sales;
• establish clearer operational or geographical boundaries within a group;
• establish separate entities for individual family members to manage, while preserving family ownership through the parent company.

The legal steps involved in a hive down are similar to a hive up and may include:

• setting up a new subsidiary (if needed);
• transferring assets and liabilities under a business transfer agreement;
• novating or assigning contracts;
• ensuring ongoing regulatory compliance.

Again, employee transfers, third party consents and licenses must be carefully considered.

Potential pitfalls

Issues such as incomplete title transfers, improperly executed novations, or failure to notify regulators can create legal and operational risks. 

Disputes can also arise as a result of potential insolvency issues. Under English law, there are two key risk areas – claw back claims on the basis that the transaction was a transaction at an undervalue or a preference, and claims for wrongful trading against the directors.

When dealing with companies at risk of insolvency, it is important that specialist insolvency advice is taken on hive downs and corporate restructurings to mitigate against these legal risks.

While this article does not provide tax or accountancy advice, it is important to emphasise that tax consequences often drive or constrain how and when a hive up or hive down should occur. For that reason, early coordination with tax advisors and accountants is essential to any well-planned restructuring.

Conclusion

Hive ups and hive downs are valuable tools in corporate restructuring and group simplification projects. They are flexible mechanisms but must be executed with precision. Ensuring proper due diligence, clear documentation and alignment with broader commercial and tax objectives is essential.

Return to news headlines