Management company for business: bonuses and risks
1. The need for all entities of the group of companies in common for all auxiliary functions:
accounting, legal, marketing and other services, the provision of which by employees of a specialized organization is organizational and economically more profitable than the creation of similar full-time services in each individual company.
Most often, managed legal entities have neither their own lawyer, nor accountant, nor system administrator – all this is done by the personnel of the management company. Objectively, not every business is able to draw such staff in each individual organization of the Group. But even with this version of the organizational structure, there should be a central link that manages local employees.
Therefore, there are cases of creating functionally similar services both in the Criminal Code and in a managed society (for example, when the structure is branched, when individual companies are significantly removed from each other and from the Criminal Code itself), however, in this case, the Criminal Code is involved in solving strategic problems, then As employees of a managed company, they perform ongoing work that does not require high qualifications and knowledge of the strategic plan for business development as a whole.
2. The ability to quickly carry out management accounting and develop, as well as adjust the previously developed strategy of the group of companies as a whole.
Undoubtedly, business owners need to have all the information about its functioning, financial performance, the degree of effectiveness of previously made management decisions.
In this sense, the value of direct receipt of information about all significant events directly to the “headquarters” is invaluable for both owners and top management.
3. Transfer of management from the plane “he is the most important here, everyone knows him” to the legal field, formalization of relations between the leading and subordinate companies by civil law means, and thereby ensuring the necessary degree of control over the activities of managed companies.
In our practice, we have often encountered situations where, as a business with a small number of owners grows, new companies are registered whose leaders are only formally such; in fact, leadership is concentrated in the hands of real beneficiaries.
But there comes a time when the number of employees and the number of individual organizations within one business reaches a critical level, the owners are not recognized by their face and do not obey their oral orders (and they are not entitled to issue written instructions). Worse, the nominee director can “get things done,” because he legally has the right to make decisions, which will lead to adverse consequences (primarily of a financial nature).
We must not forget about the costs of paying a nominee leader that you will incur in one way or another, as well as the need to pay social taxes.
Avoiding such negative aspects just helps management through the Criminal Code.
4. The possibility of legal reduction of the tax burden through the application of the Criminal Code of the simplified tax system.
Contractual regulation of the relationship between the management company and managed companies can be indirectly two types of contracts:
management services contract;
contract for the performance of the functions of the sole executive body.
The choice of a contractual instrument depends on a number of factors and the specific structure of the group of companies. Consider the features of each of the contracts separately:
Management Services Contract.
At the conclusion of this agreement, all or some of the strategic, as well as auxiliary functions with respect to the operational core are transferred to the Criminal Code: legal, accounting and personnel support, security, etc., which all the holding’s subjects need, but the creation of similar units in each of them is unprofitable and impractical.
The task of the Criminal Code in this case is to determine the main vectors of activity (to develop a marketing strategy, carry out scientific and technical development, release a program of activities for a group of companies for a year, etc.), which all managed companies should follow.
It should be noted that the managed company has its own sole executive body (director, IP manager or other Management company, but in the role of the sole executive body (EIO)), which provides operational management of the company, takes all current decisions and is responsible for financial result. It is he who is listed in the Unified State Register of Legal Entities as an entity having the right to act on behalf of the company without a power of attorney.
With this interaction of the EIO and the management company, the first is limited only by the strategic framework specified by the management company, and is completely independent in the process of managing the current activities of its company. Moreover, this framework (in the form of reporting forms and periods, as well as a liability mechanism) can and should be laid down as in an agreement with the management company (this is the condition under which the management company takes control)