The corporate governance committee and the resolution of conflicts among the members of the differences between Limited liability Company

Business societies can be organized under several Corporate types, which gives partners the ability to choose the structure more consistent with their needs and objectives, according to the business model, growth strategies and legal preferences.

In Brazil, the most adopted corporate types are limited companies and corporations. Limited company is a corporate modality in which partners have their responsibility Restricted to the value of their contributions to the capital, protecting their personal heritage from eventual debts of the organization to the limit of their participation. The corporation, in turn, is a type of company in which capital is divided into shares, and the responsibility of shareholders is limited to the price of acquired shares.

In both corporate types pointed out above, Corporate governance plays an essential role for the development, stabilization and management of conflict in business. “Whether in large or small, publicly open or closed societies, with defined control or pulverized capital, either in family societies, or even startups, corporate governance – appropriate to each stage of social development – can be a fundamental instrument for preventing social conflicts ”(1).

Definition and dimensions of corporate governance

According to the Code of Best Practices of the Brazilian Institute of Corporate Governance (IBGC), corporate governance is “a system made up of principles, rules, structures and processes by which organizations are directed and monitored, with a view to generation of sustainable value for the organization, its partners and for society in general ”(2).

The principles of corporate governance apply to every business organization, constituting the basis on which good governance develops, which are: (i) principle of integrity, which aims at the continued improvement of organizational ethical culture; (ii) principle of transparency, which seeks Provide certain and accurate information on the financial and operational financial health of the business; (iii) principle of equity, performing fair and coherent treatment between partners and other stakeholders, in accordance with their rights, duties and needs; (iv) principle of accountability (liability), which corresponds to the duty of the organization to occupy Consider the social, economic and environmental impacts arising from the exercise of their business activity; and (v) principle of sustainability, which is dedicated to understanding that the protection of the financial viability of the organization is directly related to its interdependence with the economic, social and environmental realities that it is inserted (3).

Corporate governance is structured in agents, organs and the relationship between them. This structuring will be more or less complete depending on the size, the stage of evolution and the nature of the business of society, as well as its corporate type.

The agents – and, as a result, the organs – most involved with corporate operations are: (a) the partners, who make up the General Assembly; (B) Administration counselors and inspectors, which are part of the Board of Directors and the Fiscal Council; (c) the directors, who are the members of the Executive Board; and (d) members of advice advice (4).

The rules of governance, therefore, created by their agents, organize the structures (organs) of the organization, so that, through this set of practices, it seeks to optimize The performance of society as they safeguard the interests of the partners and the stakeholders.

Corporate governance and conflicts of interest between members

The harmony between partners is not only beneficial, but vital to the survival and prosperity of the business organization. Thus, the management and administration structure of society (governance) aims to avoid Or, at least to resolve the conflicts of interest between the partners in the best possible way.

Conflicts between partners are especially present in the dimensions of political and economic rights, which must be exercised in accordance with the legal and statutory guidelines to ensure the perpetrator of the long term society.

Regarding political rights, the ability to influence Strategic decisions and participate in company management are often at the heart of disagreements and controversies in corporate environments.

The right to vote, usually expressed in assemblies and meetings, allows the partners to express themselves about the operational procedures to be implemented in the organization. On the other hand, the power of control – whether it is distributed or concentrated -Refers to the ability to exert a predominant influence on administration, leading the guidelines and strategies to be adopted in society.

The incongruity between the aspirations and visions of the partners on the strategic decisions of society can generate strife. When the control power of society is concentrated, minority partners may feel that their interests are suppressed in social deliberations. In organizations where control is distributed, in turn, even though it is assumed that decisions are made through a more collaborative and inclusive procedure, there is also the possibility of arising decision impact that impact the cohesion of business planning.

Members selection for executive and administrative positions can be presented as a field Confidence for conflict hatching, especially when there are disputes related to the control of management and strategic direction of the company.

In addition, it is the subject of corporate conflicts the exclusion or exercise of the right to withdraw the partner. With regard to the right of withdrawal, disagreements sometimes arise in relation to the assessment and the payment of the partner’s shareholding dissident and the conditions on which the exercise of such right is admitted without impairing the company’s operational continuity.

In turn, the exclusion of the partner – whether judicial or extrajudicial – represents a forced dismissal of one of the partners of society. Beyond the relational differences between the parties, there are financial impacts – since the reduction of the capital of society It can undermine investments in the organization -as well as operational, which can lead to disagreement between the remaining partners in relation to the roles to be assumed and decision -making to allow the continuity of the operation.

Regarding equity rights, they are associated with economic benefits derived from the organization’s operations. Therefore, the distribution of profits, the transfer of quotas or actions and aspects related to business succession, which are themes often marked by corporate controversies.

Profit distribution is a fundamental right of partners. The disputes sometimes originate from disagreement regarding the perception of the value and contribution of each partner to the generation of profits obtained. This conception invariably It is confused with the lack of discernment between the partner and administrator’s roles in the organization, which have different functions and responsibilities. Thus, the disparity in expectations regarding the “correct” ideal fraction of participation in results occurs when there is a lack of well -defined guidelines for the remuneration of administrators and distribution of dividends.

Yet, being Of compensation for the partners, in particular in relation to limited companies, much controversy is installed with regard to the conflict between the concepts of profit x pro-labore, regarding the partner who plays the role of administrator. It is very common that, in the absence of clear rules to determine the amount to be paid due to the work commitment in the exercise of the administration, if Dissatisfaction for non -agreement regarding the criteria set (hours of commitment, productivity, percentage of the results earned, among others).

There are also disagreements between partners regarding the share of profit that will be destined for reserve and reinvestment in the organization itself. There are those who see the need to retain a significant part of profits to ensure growth of society, and others who advocate a more robust distribution of dividends.

Regarding the transfer of corporate participation, entry into society of a new partner, foreign to the operation, can significantly alter the dynamics, culture and management of a society. In this context, concerns arise about dilution of control and eventual changes in business strategies, which can result in significant friction, even threatening the continuity of the business.

Finally, business succession is also a very controversial theme. From the death, interdiction or mease of any partners, the admission of their successors, heirs or ex-spouse may endanger the continuity of management, the preservation of organizational culture and, as a result,, consequently, Sustainability of the company.

The interests of the remaining partners can collide with those of the heirs, successors or former spouses, particularly if the latter do not have a prior involvement or knowledge of the business until the moment of succession.

In this scenario, solid corporate governance is fundamental to ensure that the rights of all partners are respected ( principle of equity ) and that decisions made reflect a equitable perspective of the business.

The governance structure, represented by agents and organs, “must ensure that the organization has clear, effective, implemented and properly disseminated policies and processes” (5) to identify and treat social conflicts. As mentioned above, the most present agents and organs and involved in the organization are:

(A) Members, which makes up the General Assembly:

The partners are committed to ensuring the interests of society and, to this end, must deliberate responsibly on matters elementary to proper organizational functioning. The General Assembly or the Meeting of Partners is the moment when the partners, through the vote, have a voice to express your views and decide substantial questions of the organization.

Thus, the establishment, by means of agreements, of clear policies regarding voting procedures are fundamental to the balance of the business.

(b) Counselors, members of the Board of Directors

Counselors in the Board of Directors ensure that operations and strategies of society are aligned with the interests of the partners and the purposes of corporate integrity. The Board of Directors “must be responsible for determining the strategic objectives, directions and risk profile of the organization, (…) related to its culture and identity” (6).

In view of this, it is paramount that the board of directors promote transparency in the decisions and actions of the company. The clear communication of corporate strategies and results strengthens the confidence between partners and other stakeholders, mitigating the perception of any conflicts of partial interests or management.

(c) Counselors, members of the Fiscal Council

The Fiscal Council has “the responsibility to verify that the organization is in Compliance with its principles and values, reflected in internal policies, procedures and standards, and regulatory laws and devices ” (7). In their supervision work, tax counselors must understand the strategy and risks to form opinion on the financial results and statements presented by the Board of Directors to the members in the Assembly General.

(D) Members of the Advisory Committees

Advisory committees are bodies advising the Board of Directors in the “ Control on the quality of financial statements and internal controls, aiming at the reliability and integrity of information to protect the organization and stakeholders” (8). The most common committees are: (i) audit; (ii) risks; (iii) sustainability; (IV) Ethics and Compliance.

(E) Directors, members of the Executive Board

“The board is the executing body of the end of business activity” (9). The directors are responsible for the implementation of all the company’s operational and financial processes, executing the strategies approved by the Board of Directors.

Furthermore, The contract or bylaws must comply with the purpose of establishing the main rules of operation of the company, with the implementation of solid corporate governance practices, which serve to direct, monitor and encourage the organization, minimizing conflicts and protecting the various stakeholders (10).

Rule differences between limited companies and societies Anonymous

Although often convergent legal structures and instruments, they are in some different aspects of their application to limited societies and corporations, especially in relation to political and economic rights:

Political rights present the following distinctions in relation to voting rights, control, withdrawal and exclusion:

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Economic rights present the following distinctions in relation to the corporate types in question:

From the above analytical frameworks, the differences of legal rule to the most sensitive subjects to the relationship between quotists/shareholders are evidenced by comparing corporate models of limited and society by action.

Conclusion

In the light of the main challenges faced by the partners, the structural and legal differences between the Limited societies and stock societies, corporate governance, the reason for the peculiarities of each corporate type, will be exercised through their agents and instruments in different ways. The adequacy to the positive and negative normative specificities of each business type is essential to achieve the best effectiveness.

The differences and controversies pointed out throughout this Article may be mitigated or renewed through legal instruments, such as: (i) the formulation of rules and guidelines provided for in the contract or status, which will have about the functioning of society, with the adoption of corporate governance practices; (ii) the celebration of the agreement of quota holders/shareholders; (III) among other measures that can Contribute to the improvement of management, organization and business development.

Regarding conflicts related to political rights, corporate governance agents will have a vast guiding legal structure at their disposal to find solutions to controversies between the partners. Otherwise, in the context of limited societies the framework Legal is limited, often demanding the challenge of establishing conflict resolution criteria at a time contemporary with its confrontation.

Given the nature of the relations between the partners, in limited societies, based on interpersonality, the performance of the Board of Directors, will face, in theory, greater challenge to objectify the controversies and search for solutions based on Data, since the relationship between partners often transcends the simple merchant objective. On the other hand, in stock companies, as a rule, solutions will be more objectively based and will find a greater number of legal provisions at their disposal, since the normative scope provided for in Law no. 6.404/76. It is much broader.

Still in the exercise of political power, the Board of directors facing greater challenges in limited companies, since the proximity with which partners exercise their right to vote is much greater and representative than in corporations. It is important to remember that, in many cases, the constitution of a board of directors in limited companies is relatively recent.

In another context, however, in societies Limited, the Board of Directors, when dealing with a more restricted membership base, has greater ease and agility in decision making, while in corporations, more analytical decisions are often required and based on robust data, due to the need to justify actions and strategies in the face of a wide number of shareholders and regulators.

The nuances mentioned above are also the subject of attention to the members of the Executive Board, in the execution of the organization’s financial and operational procedures. In limited societies, such as the partners themselves may be involved in business management, organization management is closer and personal. Governance is more flexible and execution of strategies are performed with a greater degree of informality, depending on the agreement established between the partners.

On the other hand, in corporations, the board is farther from shareholders and operates with a more rigorous and formalized governance structure. The directors are in charge of managing the company’s operational and strategic aspects, aligning with the vision and direction established by the Board of Directors and the expectations of shareholders.

Regarding economic rights, corporate governance, through its agents and organs, will face challenges in both limited structures and stocks by action. In the first, the controversies will be oriented to the rules and criteria aimed at the distribution of profits (sometimes disproportionately) and pro-labore receipt of the partner Administrator, while in Mondays the challenges are much more associated with the resource allocation rules: percentage of dividends to distribute, allocation in profit reserve accounts, etc.

Regarding the circulation of quotas or actions, either alienation or in business succession, in both corporate types it is common to exist disagreements between partners/shareholders, as it is necessary Establish rules on the right of preference and settlement of corporate interest, which are applicable to each corporate structure.

In short, corporate governance, for its better effectiveness, should be aware of the context, structure and normativity preceding its implementation in a given organization. It is necessary to establish distinct strategic and tactical planning For each organization, taking into consideration its corporate type and the challenges it intends to resolve.

Bibliographic references

(1) GALLO, Giovanna Mazetto. CHIACHIO, Rafaella. The importance of corporate governance in preventing corporate conflicts. December 23, 2022. Available at: https://www.migalhas.com.br/coluna/migalhas-connsensuals/379078/importancia-da-governanca-corporativa-na-prevencao-de-conflitos . Accessed October 3, 2023.

(2) Brazilian Institute of Corporate Governance – IBGC. Code of best corporate governance practices. 6th ed. Sao Paulo, SP. IBGC, p. 17, 2023.

(3) Brazilian Institute of Corporate Governance – IBGC. Code of best corporate governance practices. 6th ed. Sao Paulo, SP. IBGC, p. 19, 2023.

(4) SILVA, Edson Cordeiro. Corporate governance in Companies: Practical Guidance for Guidance for Shareholders, Investors, Administration and Fiscal Counselors, Auditors, Executives, Managers, Market Analysts and Researchers. 3rd ed., Sao Paulo, SP. Atlas Publisher, p. 32, 2012.

(5) Brazilian Institute of Corporate Governance – IBGC. Code of best corporate governance practices. 6th ed. Sao Paulo, SP. IBGC, p. 21, 2023.

(6) Institute Brazilian Corporate Governance – IBGC. Corporate risk management: evolution in governance and strategy. Sao Paulo, SP. IBGC, p. 26, 2017.

(7) Brazilian Institute of Corporate Governance – IBGC. Corporate risk management: evolution in governance and strategy. Sao Paulo, SP. IBGC, p. 27, 2017.

(8) Brazilian Institute of Corporate Governance – IBGC. Management of Corporate risks: evolution in governance and strategy. Sao Paulo, SP. IBGC, p. 28, 2017.

(9) Brazilian Institute of Corporate Governance – IBGC. Code of best corporate governance practices. 6th ed. Sao Paulo, SP. IBGC, p. 53, 2023.

(10) ANDRADE, Adriana. ROSSETI, José Paschoal. Corporate governance: foundations, development and trends. Altas Publisher. 7th ed. São Paulo, 2014.

Julia Oliveira Andre Teixeira

Lawyer, law graduate from Faculties Milton Campos (2019), registered with the Brazilian Bar Association, Minas Gerais Section (OAB/MG) (2019). Specialist for the L.LM Business Law Program by IBMEC (2021), MBA in high performance law by PUC Minas (2022), expert on contractual law from the Getúlio Vargas Foundation (FGV-RJ) (2023). Author of articles. Member of the Commission of Corporate Law of the OAB/MG (2022), member of the Center for Studies of Lawyers Companies (CESA), Executive Secretary of the State Council of Commercial Affairs of the Federaminas. Advisory Lawyer of Portugal Vilela Advogados.

Leonardo Theon de Moraes

Lawyer, Graduated in Law, with emphasis on Business Law, from the University Presbyterian Mackenzie (2012), registered with the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Post Graduate and Specialist in Business Law from the São Paulo Law School of the Getúlio Vargas Foundation (2014), Master in Political and Economic Law from the Mackenzie Presbyterian University (2017), book and articles author, speaker, undergraduate professor, MBA and Executive Education At FIPECAFI, a member of the São Paulo Lawyers Association (AASP), a member of the International Bar Association Business Law and Fuse Committee, member of the São Paulo Lawyers Association (AASP) and president of the Federaminas State Council of Commercial Law. Founding partner of TM Associados. Founding partner of TM Associados