Meaning of Incorporation in English

Meaning of Incorporation in English

Real Estate Development

Incorporation is the activity whose objective is to promote and carry out the construction of real estate projects formed by autonomous units, in accordance with Federal Law No. 4,591 / 64, known as the Incorporations Law.

The purpose of the merger is to regularize each of these units with the real estate registry, making that land from before become a fractional enterprise, incorporating the building that will be built there. The incorporation starts to make the apartments, garage spaces, common areas and so on legally exist, forming a condominium. For the units to be marketed, it is mandatory that the incorporation be done beforehand.

Difference between development, developer and construction company

The incorporation is the legal activity that allows the regularization of the enterprise with the notary.

The developer is responsible for this business, and can be either an individual or a legal entity. It is the company that carries out the incorporation, which legally divides the construction into autonomous units, and before that still performs the feasibility study of the work and the purchase of the land, among other functions relevant to the planning and regularization of an enterprise. It is the developer that the buyer must contact, both at the time of purchase and in case of any problem in the contract.

The construction company is going to execute the work. It can be a contractor of the developer, or in most cases the same legal entity. The construction company is responsible for erecting the condominium within the specifications and descriptive memorial contained in the incorporation, and is responsible for any items outside the norms, repairs, and what else concerns the work.

Incorporation of Companies

Incorporation is the act of absorbing one or more companies by another organization. The corporate entity of the merged company is extinguished, transferring rights and obligations to the incorporating company. The incorporator’s legal nature remains unchanged, and there is only one amendment to the contract in order to communicate the increase in equity, which is passed entirely from one company to the other.

Incorporations are usually carried out with the objective of increasing equity, expanding market control by incorporating competition, qualifying the supply chain by absorbing producers, retaining specialized personnel and concentrating technologies, among other purposes.

Difference between incorporation, merger and division of companies

In the merger, the merged company is extinguished and the incorporator does not have its legal personality changed. For example: company X is merged into company Y. The equity of X becomes Y and the legal entity after the merger is Y.

In the merger, two or more companies create a new company. In the example, company X merges with company Y, creating company Z with equity of X plus Y.

In the spin-off, a company transfers part of the equity to one or more companies that already exist or are incorporated only for this purpose. If the equity is fully transferred, the company is extinguished. That is, company X has half of its assets transferred to the new company Y and the other half to the new company Z, with separate operations. With this, X ceases to exist.

Examples of incorporation of Brazilian companies

In the banking system, a network of banks in São Paulo, Nossa Caixa, was incorporated by Banco do Brasil. The operation was only consolidated due to the approval of the Central Bank, which analyzed possible losses to competition due to the union. After this, it established commitments to be fulfilled by Banco do Brasil favoring the account holders of Nossa Caixa, in order to offset the efficiency gain obtained with the incorporation of the other legal entity

How incorporation works for employees

As with equity, the labor issues of the merged company are transferred successively to the developer. Therefore, the employees of one become employees of another, without the need to make a new contract or change in the work portfolio. The employment relationship remains unchanged, only due to a correction by the legal entity in the employment contract and a rectification in the portfolio record.