Carlos Alexandre Basílio
Lawyer at Marcos Martins Advogados
Nowadays, there is a lot of talk about so-called “Family Holdings”. However, for a large part of the population they are still unknown and it is necessary to understand why there is a need to create a Family Holding.
Succession planning is a legal institute and is provided for in Brazilian legislation, allowing the succession of assets to be established during life. In other words, establishing how assets will be divided after the death of the owner (usually grandparents, parents or uncles). Succession planning ends up being carried out through the composition of companies (which can be just one or several), and these are set up according to the family composition, and are called Holding Companies.
Thus, with the composition of a company or even the operating company, with a view to the succession of assets, the shares of the company(ies) end up being paid up/transferred to a legal entity (company) or the shares are merely donated to the heirs, now the donating partners, so that the respective share is transferred according to the will of the donating family member.
Generally speaking, a family holding company is a company set up exclusively to control and manage the assets of the partners (who are usually members of the same family), whether or not they participate in the share capital of other companies and without having to carry out any business activity.
Nevertheless, it is important to clarify that setting up a holding company will bring various benefits and has the following objectives:
- Tax advantages arising from
- legal incentives resulting from the reduction or – in certain cases – exemption
- various taxes (on donations, transfers of assets, inheritance,
- among others);
- Organization and segregation of
- segregation of family assets, allowing the head of the family greater flexibility in the
- while at the same time protecting the assets intended for the family’s comfort and well-being.
- and well-being of the family;
- Stability of decision-making power in the
- operational company;
- Simplification of the decision-making process
- and a consequent reduction in inventory and notary costs.
- expenses.
Examples of the direct benefits of setting up a holding company include:
It is crucial to clarify that setting up a Family Holding Company is not only for families that own several assets. There are many cases in which a holding company is created using only a few properties, including where there is only one. In these cases, families are already aware of the countless advantages and conveniences brought about by business management originating in the creation of the Holding Company with the intention of protecting family assets and planning the succession of assets.
As an example, we would like to highlight the main types of company used to set up a Holding Company, as follows:
EIRELI
LIMITED
In general terms, the EIRELI has a number of advantages, among which we can highlight (i) the need for other partners; (ii) the distinction between the company’s assets and the partner’s personal assets; (iii) the absence of an annual turnover limit; (iv) the possibility of being opened in many fields of activity; (v) easier tax collection by opting for the Simples Nacional (tax regime).
On the other hand, the limited liability company (the type of company that represents the largest share of companies in activity in the country) (a) allows ample flexibility in the arrangement and management of the company through the articles of association; (b) the liability of the partners is joint and several and limited to the value of the shares of each partner[1]; (c) preserves the personal assets of the partners in the event of bankruptcy or closure of the company; (d) the management of the company can be carried out by one or more persons designated in the articles of association or in a separate act.
Therefore, there are options for managing family assets, and families with large, medium or small assets are fully capable of setting up a so-called family holding company, either to protect the family’s assets or to facilitate succession planning.
The Marcos Martins law firm is fully capable of answering any questions on the subject and has expertise in all the areas necessary for setting up holding companies, and can provide the best solutions for families with large, medium, small or even small assets.
[1] Art. 1052, CC. In a limited liability company, the liability of each partner is restricted to the value of their shares, but all are jointly and severally liable for the payment of the share capital.
