l12 ther corporate structures

coprate structures

there are 3 important categoies of corporate structure

1. professional companies

2. mutualist based companies

   1. cooperatives

   2. mutual insurance companiws

   3. mutual benefit socieities

   4. reciprical guarantee companies

3. joint ventures and company groups

• economic interest groupings

• groups of companies

professional companies

law 2/2007= a company whose purpose is the joint excercise of a professional activity

• a professional activity=activity requires

  • an official university degree

  • registration in the relvant professional association

    • lawyers, architects,doctors, engineers, accountants

• joint excercise= the service is provided through the company rather than directly by the professional individual

  • activity is performed under the companys name

  • rights and obligations arising from the professional service belong to the company

  • the company is the legal party dealing with the client

• mandatory application of the law= any company carrying out actiivty must

  • comply with the professional companies law

  • have an exclusive corporate purpose consisting of the professional activity

    • professional companies cannot pursue unrelated business activties

possible legal forms

may adopt any legal form recognised by law including

• civil companies= traditional civil partnerships

• commercial companies=

  • limited liability SL

  • public liability SA

  • other commercial entities

the company is governed by

1. the law on professional companies

2. supplemntarily the law applicable to its chosen corporate form

ownership requirements

must remain under the control of professional partners

• for cap companies at least a majority of capital and voting rights must belong to professional partners

• for non cap companies the majority of coproate assets and number of partners must belong to professional partners

a professional partner can be

1. an indidual qualified to practice the profession ie lqwyer with a law degree

2. another professional compnay already registered

administration requirements

the same professional majority principle applies the management

• a sole adminstrator= that adminstrator must be a professional partner

• collegiate administrative body= when management consists of several persons the majority must be professional partners

company name

the company name can be

• objective= refering to the professional activity

  • malaga legal services professional ltd

• subjective= using the names of professional partners

  • in every case the name must include Proffesional or the abbreviation P.

    • garcia and lopez professional company

registration requirement

chnages in partner must always be registered in

1. commercial register= every change must be recorded

2. register of proffesional partnership= same changes must also be registered here

• this applies even if the company has a capitalist and not a personalist form (sl/sa doesnt have to be general partnership legal form)

transfer

the status of professional partner is particularly protected

• the status is not freely trasnferable

• trasnfer requires

  • conssent of all PPs or

  • authorisation by the majority of PP if the bylaws allow it

right of seperation

professional partners enjoy extensive withdrawal rights

• open ended professional companies= when no duration is fixed a partner may withdraw at anytime

• fixed term= partners may withdraw

  • for reasons provided by the applicable company law

  • for reasons stated in the bylaws

  • for just cause

exclusion

may be expelled from the company when

1. seroius breach occurs= partner violates legal or corporate obligations

2. disqualification from professional practice= partner loses the legal right to excercise the profession

procedure

• a resolution from the gm meeting

  • approval by a majority of professional capital and voting rights held by professional partners

liquidation quota= the value of the departing partners interest

• companies have considerable autonomy; the law adopts a flexible approach

• bylaws may determine

  • valuation method

  • calculation formulas

  • procedures for determining the liquidation amount

mutualist based companies

based on cooperation and mutual benefit rather than maximising profits for investors

1. cooperatives

2. mutual insurance companies

3. mutual benefit socieities

4. recicprical guarantee companies

cooperative

according to coop law= a company formed by persons who

• freely join and leave

• carry out business activities together

• seek to satisfy their economic and social needs

• operate democratically

• follows the principles of the international cooperative alliance

coop principles

open door

• members can freely join and voluntarily leave

• membership remains open

non capitalist basis=

• the purpose is not to reward invested capital

• members collaborate to satisfy the common social economic needs

• benefits are distributed according to cooperative participation

• indirect profit = profits are distirbuted based on cooperative activity performed not amount invested

democratic management

• one member= one vote

• voting power doesnt depend on investment size

  • differs from cap companies where voting generally follows share ownership

types of cooperatives

classification by coprate purpose

• worker cooepratives= workers jointly own and manage the enterprise

• housing cooperatives= develop and provide housing

• consumer and user= provide goods and services to members

• credit cooperatives= provide fincial services and credit

classification by degree of intergration

• first degree= member are individuals or entities directly participating

• second degree= formed by at lesst 2 cooperatives

  • these cooperatives cooperate together at a higher organsitional level

members

types

• cooperative members/users= indiduals who belong to the cooperative and hold membership rights (voting)

  • owns/ partiicpates in tje coop but does not necessarilu work for the coop

    • co op supermarket member partaking in governance

• worker members= a cooperative member who also works personally for the cooperative

  • ididuals whose contributions consist of labour

  • owns/partiicpates AND works in the coop

  • every worker member is a coop member but not every coop mamember is a worker

    • co op shop assistant

• collaborators= do not partiipate directly in cooperative activity

  • support the cooperative through capital contributions

rights

• participation= equal participation in all coperative activities

• economic= members may recieve

  • cooperative returns

  • interest on capital contribution

  • updated value of capital contributions

• participation in assemblies

  • attend meetings

  • paricipate in debates

  • vote on proposals

• electoral rights

  • vote

  • stand for election

• right to information = members must recieive information necessary to excercise their rights and fulfil theor obligations

• professional training= worker members are entitled to apprpriate training

• right to withdraw= may voluntarily leave

duties

• capital contributions= members must pay their required conitrbutions (labour/ economic)

• active collaoarion= must participat in the economic and social life of the cooperative

• confidentiality= not discolse information that could harm the cooperative

• non competition= not compete woth the coop unless authorised by the governing council

liability= limited only uo to their subscribed capital contributions

• a departing member remains liable for 5 years after leaving

  • their liability is limited to the amount reimbursed when leaving (liqudiation quota)

coporate bpdies

general assembly= the meeting of all members equivalent to gm in cap companoes

• one person one vote= voting equality preserved

• qourum=

  • first call= more than half of the coprate votes must be present or repreented

  • second call= at least 10 % of votes or 100 corporate votes must be present/represented

• adoption of resolutions requires more than half of votes cast (simple majority)

• secret voting is permitted for certain matters

governing council= responsible for governance, management and representation

• excercises powers not reserved to other ogans

• necessary body

  • exception= if fewer than 10 members a sole adminsitrator can replace it

• directors are elected by the ga

  • duration of office minimum 3 and maximum 6 years reneweable

    • exact figure determined specifically in the by laws

  • any natural or legal erson who is a member and not legally disqualified may serve

• ga can remove directors freely= no prior inclusion in the egenda is necessary

intervention= performs internal control functions

• reviewing management

• auditing annual accounts

• auditing management reports where external audits are not mandatory

appeals committee= hears appeals against sanctions imposed by gc on members

• an optional body

cooperative capital

capaital does not determine rights

• rights are not measured by capital invested like cap companies

• profits losses and surpluses depend on cooperative participating

variable capital

• due to the ooen door principle allowing members to easily leave and join capital changes whenever members join or leave

• departing member are entitled to reimbursement of their contributions

mutual insurance companies

non profit commercial companies with the purpose of covering members against insured risks

• mmebers are both the customers and owners

• members pay a fixed premium at the beggining of the risk period

  • the money is used to cover members who suffer insured losses

• it is non profit= aim is not to make money for shareholders

• they may only negage in insurance activities= no other business activity is permitted

• regulated by law 20/2015 LOSSEAR

  • a group of docotors form a mutual insurer to cover professional liability claims; all the docs pay premiums and are members of the mutual

mutual beenfit socieities

provide voluntary insurance and complement compulsory social security

• a voluntary welfare or protection scheme that supplements state social security

• provides benefits such as pensions sickness cover and death benefits

• protection is financed through fixed or variable premiums

• members may be indiduals, legal persons or other protected persons

  • lawyers join a mutual benefit society that provides an additional retirment pension on top of the state pension

reciprical guarantee companies

created to help small and medium sized enterprises obtain financing to banks and other lenders

• objectives

  • eassier access to credit= loan more ikely tp be approved

  • better finiancial conditions = interest rate may be lower

  • access to related financial services

• the sgr does not lend money itself; it guarantees the smes loan making banks/lenders more willing to lend

• regulated by law 1/1994 on reciprcal guarntee companies

• varibale capital

• members are not personally liable for company debts

joint ventures and company groups

1. eonomic interest groupings eigs

2. groups of companies

economic interest groupings eigs

an association whose purpose is facilitating the activities of its members and improving the results obtained by members

• exists to help its members businesses not to run a business for itself

• members= natural or legal persons engaged in

  • business activities

  • agricultura activities

  • craft

  • non profit research

  • liberal professionals

• profits and losses belong to the members

  • disitrubtion occurs according to the deed of formation or equally if silent

• why its different from a normal company

  • legal personality

  • commercial/mercantile entity

  • does not have its own profit making purpose

  • exists only to improve the activities and results of its members (benefit its members)

• allowed= support team for businesses

  • providing common services

  • purchasing equipment jointly

  • conducting research

  • marketing on behalf of members

• limitations= the grouping can assist members but cannot replace them

  • the activity must be ancillary to members activities= it caannot replace members businesses’

  • group cannot own shares in member companies directly or indirectly

  • group cannot direct or control members

  • group cannot control third parties

groups of companies

consists of several companies subject to common economic management

• a group exists when a company directly/indirectly controls one or more other companies

  • a set of legally indpendnant they operate as a single economic unit under the control of a parent company

• parent company/holding company= company who excercises control

  • aquires shares not merely for investment

  • objective is buying shares to control other companies

• subsidiaries= the controlled companies the parent imposes its strategic decisions on

  • legally seperate but follow the strategy decided by the parent company

• chain of companies= control may be excercises

  • directly= parent on subsidiary

  • indirectly= parent on subsidiary on sub subsidiary

• presumption of control art 42comc= a cpmpany is presumed to control another if

  • holds majority voting rights= parent has most voting power ie a owns 60% of bs shares

  • can appoint or remove mmost directors= parent controls the composition of the admin body ie A can choose 4/5 directors

  • has actually used its votes to appoint most directors= control inferred because it effectively selected the majority of the board

    • a only owns 45% but because remianing shares are widely dispersed, he consistenlty elects most of the board

• contral arises through

  • ownership interests

  • contractual arrangements

summary

professional comoanies

• joint excercise of regulated professions

• majority ownership and management by professionals

• restricted trasnferability of professional status

• broad rights of seperation and exclusion mechanisms

cooperatives

• open members ship

• one member one vote

• profits distrubuted according to activity not capital contribution

• variable capital structure

mutual insurance

• non profit inurers

• serve members only

• exclusive insurance activity

mutual benefit socieities

• provide vulnatary insurance/ welfare protectoon ie additional lawyer pension scheme

• complement compulsory social security ie state pensions

• financed by member contributions

reciprical guarantee companies

• helps sme obtain financing

• members are not personally liable for gurantees, the company is

economic interest groupings

• ancillary organisations supporting members businesses

• no indpendant profit mtoive

• cannot actively control member companies

groups of companies

• parent controls subsidiaries

• control usually through majority voting rights or board appointment powers

• operates as a single economic unit despite seperate legal personalities