After all, what is a social contract?

After all, what is a social contract?

Table of Contents

THE social contract it is a very important step in starting a company. Knowing more about the subject can make a big difference and bring relevant information to those who are starting to Open a company or think about having your own business one day.

If you have heard of social contract, but do not know exactly what it is, this post is for you. Check below what is the social contract of a company, who needs to do it and how to create one.

What is a company's social contract?

THE social contract it is for companies the equivalent of a birth certificate for individuals. It is the document that contains all the data of a company and makes its opening official. Its issuance guarantees the company rights such as opening a legal checking account or issuing invoice.

The registration of the social contract is done in State Commercial Board or in Legal Entity Registry Office, according to the type of company. The document must contain all the data of the company, such as its corporate name, location of the headquarters and all the information of the partners.

It is worth noting that the social contract it is used to register companies, that is, companies opened by two or more people. In the case of a company opened by an individual entrepreneur, there is no need for a social contract standard, since in this situation there is no society.

What are the types of social contract?

As has been said, the social contract it is used only in the case of partnership. For companies opened by one person, there are equivalent versions of the document, with clauses adjusted according to the legislation of each business category. Below are the existing versions for some of the categories:

Limited Company (LTDA)

It's the social contract standard, which can be changed as needed. The possibility of alteration is very important for companies that are still defining their activities or that are changing the field frequently.

We can point out that a Limited Company does not need management advice, which allows only one person to run the company. In addition, the personal assets of the partners involved are “protected” in the event of bankruptcy or other serious problems that may affect the company.

As well as the responsibilities towards the company, the remuneration of the partners varies according to the percentage that each invests or invested in the company

Individual Entrepreneur (IS)

It is the Entrepreneur's Requirement, which would be equivalent to social contract for individual entrepreneur. The Application, unlike the contract, cannot be modified.

As the name suggests, the Individual Entrepreneur runs the company alone, without partners. In this business structure, there is no separation between the assets of the individual and the CNPJ. In other words: if the company goes into debt, the entrepreneur's assets can be used to defray debts. It is worth remembering that EI is the corporate type that can operate in segments such as MEI, ME and EPP.

Individual Microentrepreneur (MEI)

It is the Individual Microentrepreneur Condition Certificate (CCMEI), a document equivalent to the Entrepreneur's Application.

The ease of issuing invoices, plus the payment of simplified taxes and the reduction of bureaucracy, make the MEI one of the most popular formats of social contract. According to data from Federal government, Brazil surpasses the 10 million individual microentrepreneurs.

Individual Limited Liability Company (EIRELI)

It is the Constitutive Act, also equivalent to the social contract for companies without a company, but in a different category from the EI or MEI. The legislation for EIRELI, therefore, differs in some points.

Therefore, the clauses of the document are adjusted accordingly and this segment of the social contract separates the assets and assets of the company and the entrepreneur, in addition to the mandatory presentation of a minimum share capital of 100 minimum wages. Like ME, EIRELI also falls under the category of Simples Nacional, Real Profit and Presumed Profit.

Every kind of company, be it a limited society, anonymous or an individual entrepreneur, will need some kind of “birth certificate” as a record. What differs from one category to another is the type of form and the necessary information, which vary according to the rules of each category.

How to make the social contract of a company?

Create one social contract it is relatively simple – in fact, its degree of difficulty will be proportional to the size of the company. There are models of social contract available on the internet, both on consultancy sites and on the State Commercial Boards themselves.

However, be aware of the necessary procedures: it is not just taking the form and filling it out. It is necessary to understand the document and its clauses, preferably with the help of a counter. In addition, its final version must be signed by the company's lawyer. Seeking the help of professionals from the beginning, to ensure that the process flows smoothly, is always valid.

The complete list of information that needs to be listed on the social contract can be found at Article 997 of the Civil Code. Below, some of them are just for quick reference:

  • Qualification of the partners: data such as name, nationality, marital status, profession and residence of each partner;
  • Company data: starting with the name of the company – or corporate name -, but also encompassing the address of the head office and branches and the company's term (which can be extended, if necessary);
  • Social object: the description of the activities that will be performed by the company (remembering that, for each activity, the company must guarantee the appropriate licenses);
  • Capital of the company and share of each partner, as well as its share of losses and profits;
  • Rights and obligations of members;
  • Company management: it is necessary to define one or more partners as administrators of the business.

The good news is that the portal already exists Simple redesigns, made available by IRS with the objective of consolidating in a single platform all the bodies participating in the companies' registration process. This unified portal aims to accelerate and facilitate the opening of businesses for the citizen entrepreneur.

Do you want to know more about what is a social contract? Watch the video below where the SEBRAE explains how to make one and the knowledge you will get from it.

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Why is it important to create a social contract?

In addition to seeking expert advice from accountants and lawyers in the creation of the document, ensuring the understanding and agreement of all partners involved in the foundation of the company is essential to create a social contract efficient and avoid problems in the future.

In relation to the division of responsibilities and the role that each one must fulfill within society, the more detailed the social contract, the smaller the margin left for interpretation that may cause disagreements between the partners and even legal disputes.

In summary, the social contract it is the registration document for a new company and must be carefully created. Thus, the company can establish itself on strong bases and consolidate itself in the market.

Although the process of opening companies in Brazil is still extremely bureaucratic, the government is already showing signs of adjusting to current technologies and providing some integration of systems to make life easier for the entrepreneur.

This wave of integrated solutions, in fact, extends to the most diverse sectors of companies, from the supply chain to the financial management it's from HR. Companies are increasingly betting on online platforms to make their processes more efficient and agile, and to spend less time with bureaucracy, focusing on what really matters: human capital.

Here’s a tip for anyone thinking about opening their own business: after a social contract well done, the recruitment of professionals with the right profile for your company will be the best foundation for a successful business.

The website CRC (Regional Accounting Council) provides a model contract for download in PDF. If you have a business idea and a prospective partner in mind, call him right now and download the social contract file. Start your company's activities with the documentation in order and avoid headaches.

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