Any profession based on groups of people working on the basis of agreements, according to commercial law, is developed through commercial companies, or corporations . That is, companies or organisations. This is the legal form taken by any type of entity constituted with a given capital, in which several partners and a bank offer financial credit, as long as the case requires it.

The types of commercial companies are determined according to the activity in which the company wishes to engage . It is not the same to want to sell a product (tangent) than a service (intangent), a car than a few shirts, or a plane ticket and a plane. Different factors will need to be well analyzed and studied for the type of society that one wants to project into the business world.

Who can incorporate a company?

It is imperative that this issue be addressed. For legal purposes, any individual or legal entity , that is, a citizen with rights and obligations, has the legal capacity to incorporate a company. The conditions and nature of the activity to be carried out will ultimately affect the character of the company.

Let’s take it one step at a time. It is necessary to differentiate between society and the individual. The law does not provide for any prior or special authorisation for an individual to start a business. Legal capacity is simply required, i.e. no legal impediment by means of a court ruling .

What is a trading company?

Unlike an entity or individual entrepreneur, a company starts from the existence or agreement between more than two people, with an agreed capital depending on the objectives or economic activity that the company is to be given. There must be a contractual consensus, technically defining the obligations and rights of each of the partners.

A company can focus on an activity with different benefits and objectives, be a trading company or a cooperative society. In the case of the latter, its function is of a consultative nature and to support other companies, especially in order to improve their performance.

The different types of commercial companies

As we have seen in the introduction, companies can adopt different types of trading companies . We will review the 5 most common ones in a generic way.

1. Public limited company

The Sociedad Anónima is the most common type of company within the Spanish tax system. It can be formed by a single owner, with a contribution of no less than 60,000 euros (a lower amount disqualifies the status of an anonymous company), divided into shares contributed by different partners. In addition, the S.A. entails a payment of 25% of the total capital to make its creation effective.

The constitution of a public limited company is conditioned by the granting of a public deed before a notary and its corresponding Commercial Registry. The capital contributed is divided into shares contributed by the partners, which can be made in cash, rights or goods.

2. Limited Liability Company

The limited liability company has an initial capital divided into indivisible, cumulative and, most importantly, shares between the partners . No one can have more or less participation than the others. The amount for its constitution cannot be less than 3,000 euros and this amount must be paid ipso facto.

The partners have the right to participate in the distribution of profits and the resulting assets (surplus). The partners have the right to make executive decisions, as well as to be part of the Administrative Board, which is in charge of deliberating actions and agreements.

3. Workforce owned company

It is one of the least common commercial companies today. It has an enviable democratic character and transparency. In a workforce owned company the capital may be contributed directly by the employees , which creates a more direct link between the responsibility of the employees and the resources available through their management, thus avoiding misappropriation. Likewise, there may be a partner who is not a worker.

In this company there cannot be less than three founding partners, with a capital of not less than 60,000 euros in the case of an S.A.L., or 30,000 euros in the case of an S.L.L., where a percentage of at least 25% of the total capital must also be paid up at the time of incorporation.

4. Partnership

The partners are direct managers, they respond personally to the social debts and they do it in an unlimited and solidary way . Furthermore, these partners can contribute their influence in the form of capital and labour at the same time. The curiosity in this case is that the name of the company must contain the names of all the members or, on the contrary, the concept “and company” or “cia” must be added respectively.

The partnership must have not less than two individuals, the capital contributed by each of them can be in trust money, rights or directly credits . The partners have the right to direct management of the company, monitoring and control of the administration and accounting.

5. Cooperative Society

Within the corporate world, this would be the model that every employee would want. This company is clearly different from the previous ones because it has a more horizontal and participative character of the partners . In fact, the cooperative society is an association of natural or legal persons who seek to develop an economic activity of common interest.

The advantages of this company are that the capital is variable and neither a minimum nor a maximum is needed for its constitution, the management of the company is democratic, all the partners have the same rights and they can register or leave voluntarily and whenever they wish.

Bibliographic references:

  • Fanjul, J. L.; Castaño, F. J. (2001). Business project. Editex. Madrid.
  • Rodrigo Illera, C. (2008). Administration and Business Functions. Sanz y Torres Publishing House, Madrid.