Collective Enterprise: A Legal and Economic Overview
Collective Enterprise
General Economic and Financial Failure of Individual Enterprise
Limited space and volume expansion. Financial capital is the employer’s fortune.
Legal and Social Failure of Individual Enterprise
In our law, it has no existence separate from the employer and is therefore not a different heritage.
Concept of Partnership Agreement (Civil Code 2053)
A society or company is a contract in which two or more persons provide something in common to distribute the derived benefits among themselves. The partnership is a legal entity, distinct from its partners individually considered.
Distinctive Features of a Society: The Contract and the Moral Person
The notion of society is ambivalent: on one hand, it implies a legal act (contract), and on the other, it is a legal person.
Legal Nature of the Company
- Classical contract theory
- Von Gierke deed theory
- Theory of the institution
- Theory of employment contract
Requirements for the Statutes
General Requirements for All Contracts
For a partnership agreement to be valid, it must fulfill the conditions of a valid contract:
- Consent of the party undertakes: Free of defects (error, force, and fraud)
- Capacity to contract
- A particular object that constitutes the matter of commitment
- A tender because of the obligation
Special Requirements for the Statutes
- Contributions: Two or more people decide to put something together to share benefits. In exchange for their contribution (cash or labor), the partner owns a social part. This can be an act of public companies or part interest in the company of people. The capital: Social capital consists of the set of inputs or shares. Capital represents a debt of the company to its partners. Different Kinds of Contribution: Can be money, species, jobs, or services.
- Profits: The profit motive: In a restricted sense, cash benefit is an enrichment; broadly, any significant material advantage in money. When there are benefits: They are distributed each year. The distribution of benefits: One must distinguish between social liabilities (debts) and social assets (credits). Generally, the distribution of benefits appears in the partnership agreement. If the contract does not contain the form, they should be distributed proportionately to the value of the member’s contributions.
- The affectio societatis: The will of the collaborating partners to participate actively and on an equal footing. It implies the presence of two or more partners and their willingness to work together and accept the randomness of the company.
Legal Personality
Chilean law supports the theory of fiction. The moral personality of companies is recognized by law and jurisprudence.
Heritage society: The heritage of different partners is managed autonomously by society.
Name and address of company: The name of the company varies according to type. The address should be real, not arbitrary or fictitious, and fixed by the partners.
The nationality of corporations: The legal tie that binds a society with a particular State is irrelevant for implementing the law on its formation and operation.
Classification of Societies: Civil and Commercial
The underlying element for this classification is the society’s purpose.
Art 2059 CC: If the society’s object is to perform acts described by law as business, the society is commercial. If the object is not constituted by acts of commerce, the society is civil, except for corporations, which are always commercial, even when formed for civil affairs.
Importance of Ranking Civil and Commercial Societies
- Constitution: Commercial societies are solemn (public document, registration of trade). Civil societies are not subject to any formality.
- Disclaimer of partners: In civil societies, partners are liable for all assets. In commercial societies, liability is unlimited, joint, and several.
- Accounting: Civil societies are generally not required to keep accounts. Commercial societies must carry mandatory accounting.
- Municipal permits: For compliance and tax obligations, the partners’ profession does not affect the legal status of civil or commercial matters.
Partnerships, Corporations, Limited Partnerships, and Limited Liability Companies
Based on formal characteristics, mainly administration, partner responsibility, name usage, and the possibility of selling rights in the society.
Collective societies: Based on mutual trust among partners, where all manage, have the use of the name, and are liable with all their assets for company debts.
Corporations: Capital is divided into shares and managed by a board whose members are temporary and revocable.
Limited partnerships: Two types of partners: limited partners provide capital assets, and managers (gestores) are responsible for administration. These are governed by rules of limited companies for limited partners and rules of partnerships for managers. Two classes: simple and stock.
Limited liability company: True partnerships where partners expressly limit their liability to the amount of their contribution.