Types of Companies: Classification and Characteristics

Posted on Mar 12, 2025 in Law & Jurisprudence

The legal form of a company is crucial for its operation and structure. Here’s a classification of different company types:

Individual Business

An individual business is where the owner is a single person. Individual employers need to be adults and have full access to their own resources.

Partnerships (Private Civil Society)

A partnership is formed by a contract where two or more individuals agree to share money, property, or industry, with the intention of distributing the profits obtained.

Business Companies (Commercial Companies)

These companies create a common fund to help in the operation, with the aim of distributing benefits among all members. Their creation and distribution of benefits are formalized through registration in the public registry.

  • Capitalist Companies: Partners contribute capital; personal characteristics are less important. Examples include:
    • Public Limited Company (SA)
    • Limited Liability Company (SL)

Companies of Social Interest (Cooperatives)

Cooperatives do not primarily seek profits for the company itself, but rather to satisfy the common needs of its members. They are focused on the collective good.

Limited Liability Company (SL)

This is an ideal structure for companies with limited capital and a small number of partners.

Characteristics:

  • Can be created with one or more members.
  • Members’ liability is limited to their contributions (invested capital).
  • The company name must be followed by “Limited Company” or “SL”.

Constitution:

These companies are formed by a public deed and must be registered. The Articles of Association must include:

  • Residence
  • Share Capital
  • Number of shares, their nominal value, and correlative numbering
  • Organizational and administrative structure
  • Specific conditions and legal agreements as established by law

Subsidiary Bodies:

  • General Assembly
  • Administrators/Managers

Partners’ Rights:

  • Right to participate in the distribution of profits.
  • Right to participate in decision-making.
  • Right to be elected to administrative positions.

Public Limited Company (SA)

In a Public Limited Company, the personal characteristics of the members are not of primary importance.

General Characteristics:

  • Members’ liability is limited to the capital paid.
  • The company name may include “SA” or indicate anonymity.
  • Free transfer of shares after commercial registration.