Business Legal Structures and Company Types

Understanding Business Legal Forms

Independent Legal Identification

The legal identification of an undertaking to the administration of customers and suppliers.

Responsibility

The obligation to respond to debts incurred by our business activity. This can be limited or unlimited.

Members

Individuals associated to form a company.

Equity Contribution

The contribution partners make to a society, either in money or labor.

Two Main Legal Forms

Legal forms are broadly grouped into entities subject to Income Tax for Natural Persons (in its various forms) and entities subject to Corporation Tax.

Individual Entrepreneur

• Definition: A natural person who performs an industrial, business, or professional activity in their own name.
• Partners: 1 (single owner).
• Responsibility: Unlimited.
• Minimum Capital: Not applicable (no minimum).
• Management Organs: The individual owner.
• Constitution: Voluntary registration in the Commercial Register.

Limited Partnership (Sociedad Comanditaria)

• Definition: A commercial company where capital is divided into shares. These shares are indivisible and cannot be called "shares" or be freely negotiable. Liability is limited to the capital contributed.
• Minimum Capital: €3,005.06 (for a limited partnership by shares).
• Management Organs: General Meeting and Sole Administrator (or Board of Directors).
• Constitution: Public document and registration in the Commercial Register.

Public Limited Company (Sociedad Anónima - SA)

• Definition: A company where capital is divided into shares that can be freely transferred. It operates under the principle of limited liability, meaning partners are not personally liable for company debts.
• Minimum Capital: €60,101.21.
• Management Organs: General Meeting and Board of Directors (or Sole Administrator).
• Constitution: Public deed and registration in the Commercial Register.

Worker Company (Sociedad Laboral)

A type of company (either a Limited Liability Worker Company - SLL, or a Public Limited Worker Company - SAL) where the majority of its capital belongs to its workers. These workers provide their services and have an indefinite employment relationship.

• Minimum Capital:
  • SLL: €3,005.06
  • SAL: €60,101.21
• Constitution: Registration in the Register of Industrial Societies.

Worker Cooperative

• Definition: Partners provide jobs through direct personal effort, either part-time or full-time, within an organization for the production of goods or services for third parties.
• Responsibility: Limited, unless otherwise specified in the statutes.
• Minimum Capital: No minimum capital required.
• Management Organs: Governing Council, General Assembly.
• Constitution: Registration in the Register of Cooperatives.

Community Property (Comunidad de Bienes)

• Definition: An agreement by which the property of a thing or an undivided right belongs to several persons.
• Partners: 2 or more.
• Responsibility: Unlimited.
• Minimum Capital: No minimum capital required.
• Constitution: Contract of commoners (written or verbal).

The Franchisor

The franchisor provides a sufficiently profitable product or service, a known and differentiated brand, and the know-how (the mode and manner of managing the business).

Know-How

The method and manner of managing and running a business. It encompasses the experience and expertise of the franchisor in terms of their business. This is materialized in a series of manuals and conveyed through theoretical and practical courses.