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Corporate purpose: The Rules of The Game When Creating A Company

When establishing a company , one of the main activities that must be carried out in the first place is to think and correctly plan the purposes that it is going to pursue, as well as the partners. Once you have thought about what the company seeks to achieve with its activities, a differentiation must be made between the purpose of the company and the corporate purpose . These two concepts turn out not to be the same, and it is necessary to carry out the exercise of differentiating them to achieve a correct constitution and definition of the legal person, reflecting the objectives of the partners.

How and when do you have to differentiate them?

At the time of drafting the bylaws, great attention must be paid to establishing the corporate purpose. Well, although the bylaws are the rules of the game, the game itself is the corporate purpose. To correctly carry out the differentiation exercise and achieve a good definition, it is vital first to determine what is the purpose or purpose that the company pursues at the time of its constitution, since the corporate purpose would not exist without this first step.

What is the importance of correctly determining the corporate purpose of a company?

The relevance of distinguishing these two concepts stems from the confusion that is created by raising only the corporate purpose, believing that it covers the entirety of the purpose that is actually pursued. Falling into these types of errors can cause harmful situations to society, as will be seen later.

The object is an essential element of society, through it, the partners set the limits of the legal capacity of the company, and consequently, the legal framework of action. In other words, the definition of the corporate purpose dictates what the company can do – remember that a company can only do the activities that its corporate purpose determines.

On the other hand, the purpose or end is the operation, say specialized activity for which the company was created.

Simply put, it is said that the social object is the intent to which an action and operation is directed or directed, and the end is with what or why something is done. Both concepts have similarities, so when studying them in depth, an exercise of reflection and visualization should be done on what the company can do in the future. In this way, good fiscal, financial or legal planning can also be produced according to the reason for which the company was created, as well as obtaining a charter that embodies the will of the individuals. Currently, it is essential to have the corporate purpose correctly specified according to your needs and activities.

As said, the corporate purpose determines the actions of the companies, as well as is the basis of their tax planning and tax strategies in their respective case. It also takes importance when requesting a loan from financial institutions or making contracts with different companies or individuals, as it may be that within the bank’s formalities obstacles are established in this regard because the corporate purpose is not defined. Similarly, when requesting government certifications or permits, the charter must reflect the activities for which permission is being requested. Likewise, the corporate purpose serves as a limit to the administrators’ ability to act and is closely related to the deductions that the company may make. Not to mention that within the framework of the new labor reform in relation to subcontracting approved this year, it becomes even more important to correctly define the activities that the company may or may not perform.

To achieve a correct planning of a legal entity, it is necessary to carry out an exercise of reflection and visualization on the purpose or general purposes that the company will pursue in order to perfectly define the corporate purpose, contemplating, of course, the will of the partners. When you want to play, you must first have the idea of ​​the game, and then structure it.

How can we define the corporate purpose and establish my company?

The definition of the corporate purpose is a joint effort between the partners of the company and the lawyer, notary public, public broker or the LegalTech platform of your choice. It is very important to approach experts in the field for the correct definition of the corporate purpose of your company, you have the idea and these other actors become the artists who embody it in your articles of incorporation.

Corporate purpose: The Rules of The Game When Creating A Company
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