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Understanding corporate structures like the Participatory Society (SCP) and the Specific Purpose Society (SPE) is essential for individuals looking to get involved in the expanding world of investments.
SCP is commonly utilized for raising funds from investors in the real estate industry and is outlined in Articles 991 to 996 of the New Brazilian Civil Code.
This mode is becoming more popular as it is a simplified way to invest with reduced risk and higher profits.
The Participation Account Society is distinct from the Specific Purpose Society, as we will explore further in the following text.
What does a Participation Account Society entail?
Rubens Requião views fundraising as a modern tool for economic development, with broad applications in commercial law.
To comprehend SCP, it is crucial to grasp the functions of partners, which are divided into ostensive and participating partners.
The ostensive partner is someone who actively collaborates in managing society and advancing the business, taking on responsibilities both internally and externally.
The partner involved must provide the required capital for investment in the business, but they do not have the authority to manage the company.
SCP is a partnership where only one partner is actively involved in business dealings, while the other partner remains hidden from outsiders.
In civil construction, partners contribute capital and share responsibility for the work, with one partner overseeing the construction.
The company’s closure activities are finalized through a straightforward accounting process for participation liquidation.
Advantages of SCP in the real estate industry.
In the real estate industry, it is typical to have a partnership agreement known as an SCP. The partner or investor involved becomes a member of a company through participation, with the corporate entity or developer acting as the visible partner.
The partners involved in the project act as the “investors” for the units that make up the real estate venture, typically receiving financial support in return.
This type of society is appealing to investors as it cuts down on bureaucracy and enables fast resource access for businesses.
Investors benefit from tax savings as they are not required to pay income tax on dividends received.
SCP and SPE distinctions
The Society of Specific Purpose (SPE) was established to facilitate the development of certain projects involving multiple individuals in a situation where creating an entrepreneurial approach was essential.
SPE is extinct since it has achieved its specific purpose or intended action.
The incorporator can select the legal corporate structure that best fits their requirements when forming the SPE.
The Society of Specific Purpose (SPE) operates with limited activities and has a predetermined lifespan.
To distinguish between SCP and SPE, we have created this concise list for your comprehension.
SCP: Participation Account
- It is a society without any distinct individuals.
- The rules are specific and established by the parties.
- The ostensive partner is the only one who interacts with third parties.
Society with a specific purpose (SPE)
- It is given human characteristics.
- The regulations are specified in the official social agreement.
- All individuals also fulfill social responsibilities.
It is the investor’s responsibility to select the corporate structure that aligns best with their objectives.
It is essential to define collective funding or crowdfunding, as the pool of investments acquired through an SCP, while similar to the concept, does not precisely align with it.
Crowdfunding allows for diversifying investments in the real estate sector.
Corporate businesses are more frequently turning to financing to support the implementation of their projects due to numerous shifts in the real estate market.
New corporate models have developed to make it easier to attract investments for real estate projects.
Investors who have experienced the stock market’s ups and downs may feel more secure investing in real estate crowdfunding, as it is independent of the financial market.
During periods of economic instability, like the present time, the crowdfunding industry tends to stay steady and often outperforms traditional investments.
The investor engages in a contract with the company through a platform and receives a share of the sales.
Crowdfunding provides stability through diversification and has revolutionized real estate investment by making it accessible to everyone.
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