How to form a Parent Company?

1. It's good to hear that you have money to waste. Your setup will require a fancy lawyer to work out all the details, costing you >$10,000. Is that expense really necessary?

2. Board members can easily have stock options in only the company they sit on the board of. That's not the problem. The problem is that you want most of the companies to be owned by the parent company (otherwise it wouldn't be a parent). By that, you mean controlling interest, maybe close to 99% of the shares. Whatever is left, you can give to the board members.

I also question the notion of board member for an entity that is controlled by another one. It doesn't look like your board members would have much independence. Or are you thinking of an advisory board?

Having a parent company or a holding company with one or more subsidiary companies is quite normal among (large) companies.

In English, "parent company" typically means a company with controlling ownership (51%+) of the subsidiary company. The question of control is really a separate issue, and sometimes in layman's terms "parent company" can just mean "company which owns a chunk of another company".

There will be many considerations to make, and they will be different from jurisdiction to jurisdiction. So OP should really seek the advice of a lawyer, preferably a good one who is specialized in this area of law.

How can I offer board members options only in one company and not in the actual parent company?

Just make options for shares in the subsidiary company. It really is no more complicated than that.

However in many cases a lawyer would recommend creating a shareholders' agreement in addition to the company bylaws. A lawyer who is advising the recipient of the options would probably expect such an agreement; or rightfully criticize the deal if there is no legal protection of the (minority) shareholders' rights. So we are back to "go see a lawyer". :-)

@Drew Little: I looked at your webpages, and I did not see a clear, honest business idea articulated there. I don't want to question your business without reason, and thus I'll answer your question without speculating in why you're asking the question. However, I agree with Alain Raynaud in the basic sentiment that setting up multiple companies given the business idea seems ... at least to be premature optimization, too heavy on bureaucracy and too light on business idea...

Disclaimer: I am not a lawyer, and the above should not be construed to be qualified legal advice.

The setup does NOT necessarily require the involvement of a lawyer OR excessive legal fees. We're a tech startup with a multiple entity structure. I would be happy to walk you through some of our learnings, but here's a nutshell answer to your question:

The Board of Directors of each company can be completely separate and independent from each other. You do not need to worry about an individual being a Board member of only one subsidiary.

You can grant options to anyone in any company you choose: it is perfectly acceptable to grant options in the subsidiary and not the parent. Note, however, that once the options are exercised, the parent company would not own 100% of the subsidiary.