
Edson Gissoni and Rual Rousselet – Executive Partners of DMS PARTNERS
UNDERSTANDING THE IMPORTANCE OF CORPORATE STRUCTURE IN A MEDIUM-SIZED COMPANY
The corporate structure of a medium-sized company is essential for its good
operation of the business, as it defines how the ownership and management of the company
will be organized. In a medium-sized company, the corporate structure should be
carefully planned to balance operational flexibility with
need for adequate governance and control, considering both the
particularities of the company's size regarding the tax and regulatory environment.
Components of the Corporate Structure in Medium-Sized Companies
1. Type of Company:
In medium-sized companies, the most common partnerships are
the limited company (LTDA.) and the public limited company (SA),
although other options, such as a simple partnership or a partnership
by simplified actions (SAS), can also be considered. The
choice of type of company directly impacts obligations
tax, the responsibility of partners and flexibility in the management of
enterprise.
Limited Liability Company (LTDA): It is more flexible and
widely used in medium-sized companies. The
liability of partners is limited to the value of their
quotas, which provides protection to assets
staff of the partners.
Public Limited Company (SA): Although more common in
large companies, it can also be an option
for mid-sized companies looking to expand their
capital and increase governance. The responsibility of
shareholders is limited to the price of the shares they own.
2. Shareholdings or Quotas:
The distribution of quotas or shares defines the control of the company. In
a medium-sized company, the founding partners usually have
significant participation in the company, which guarantees greater control.
In the case of a SA, participation is made through shares, which
may be preferential or ordinary, depending on the type of
society. The division of shares or stocks must be well defined to
avoid future conflicts and ensure a balanced distribution of
voting rights and profit sharing.
3. Governance Standards:
Corporate governance in medium-sized companies should be
structured to ensure that decisions are made in a
transparent and efficient. In an LTDA., governance tends to be
simpler, with partners actively participating in decisions.
In a SA, governance is more formalized and includes bodies
such as the Board of Directors and the Executive Board, the
which requires more structure and organization.
Board of Directors: In medium-sized companies
port that opt for SA, a
board of directors to direct the major
strategic decisions.
Members/Shareholders Meeting: Holding of
assemblies to deliberate important issues, such as
approval of balance sheets, changes in the structure of
governance and profit distribution.
4. Management Bodies:
In medium-sized companies, management is usually shared
between partners or shareholders, but may include a division of
responsibilities in a more formalized manner. It is common to
presence of an Executive Director or CEO responsible for
daily executive operations, while the partners and/or advisors
act in the most strategic decisions.
Executive Board: In medium-sized companies, the
board of directors may be composed of a group of executives
responsible for areas such as finance, marketing,
operations and human resources.
Governance and Audit Committees: To ensure greater
transparency and control, some medium-sized companies
also adopt specific committees, especially if
want to grow or raise funds from investors.
5. Hierarchy of Decision Making:
The hierarchy of decisions in medium-sized companies tends to be
more centralized in the early years, with the main partners or
shareholders having great influence on decisions. As the
company grows, it is possible to establish more efficient processes
formal, such as committees to approve large investments or
structural changes. The definition of who can make decisions in
company name helps to avoid confusion and optimize the
governance.
6. Division of Partners’ Responsibilities:
In a medium-sized company, partners usually define
clearly define your responsibilities, such as financial management,
commercial, production, among others. In a LTDA., the
liability of the partners is limited to the value of the shares that each
one owns, but there may be agreements about responsibilities
additional benefits for active partners. In a SA, shareholders can
have responsibilities further away from direct management, with the
administration being the responsibility of the Executive Board and
supervised by the Board of Directors.
7. Share Capital:
The share capital of a medium-sized company must be sufficient
to cover the initial operating and expansion needs of the
business. Share capital must also be distributed clearly
between partners or shareholders, reflecting their participation in the
company. In a limited company, this value is defined by the
partners and is a guarantee to cover any debts. In a SA,
share capital is divided into shares and can be easier to
increase, if necessary, by issuing new shares.
Fundamental Documents in the Corporate Structure of Companies
Medium Size:
Articles of Association: For medium-sized companies that adopt the model
of a limited company (LTDA), the articles of association are the main document.
It specifies the share capital, the division of shares, the governance structure,
the form of profit distribution and company management.
Articles of Association: For companies that opt for the partnership model
anonymous (SA), the articles of association are the document that regulates the structure of the
company, governance and shareholder participation.
Shareholders' Agreement: In medium-sized companies, it is common for
partners enter into agreements that regulate aspects such as the sale of shares,
shares linked to the agreement, the administration of the company, the rights of
transfer and preference, the councils, the “tag along” and “drag” clauses
along”, non-competition, profit distribution and succession in control
of the company. This agreement can be especially useful for preventing disputes and
ensure business continuity.
Importance of Corporate Structure for Medium-Sized Companies
Defining a solid and well-planned corporate structure is crucial for companies
medium-sized, as it directly impacts:
Tax Planning: Depending on the corporate model chosen, the
company will be subject to different tax regimes. The choice of model
right can generate significant tax savings, improving the
business profitability.
Corporate Planning: A well-defined corporate structure offers
legal security for both the company and its partners, minimizing
personal risks and protecting the company's assets, in case of debts or
disputes.
Financial Planning: The way in which social capital is organized and the
partners' responsibilities are defined and have a direct impact on the way in which
the company raises funds, pays its taxes and distributes profits, affecting its
financial sustainability.
Therefore, the corporate structure in a medium-sized company should be
carefully planned to ensure efficient administration, avoid conflicts,
mitigate risks and ensure the company's sustainable growth.
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