Business Person Concepts and Personalist Company Structures

Understanding the Business Person and Personalist Companies

Case 1 examines the concept of the business person and the initial types of companies, specifically personalist companies.

Natural vs. Legal Persons in Business

A business person is the legal subject that carries out a commercial activity. This entity can be a natural person or a legal person:

• Natural Person: The business person is the individual. For example, if Marta opens a clothes shop as a sole trader, Marta herself is the business person; there is no separate company.
• Legal Person: The business person is the company itself. For example, if Marta creates Marta Fashion S.L., the business person is Marta Fashion S.L., not Marta personally. While Marta may be the founder or shareholder, she is not the business person.

Essential Elements for Company Constitution

A company requires specific elements to be legally constituted:

• Deed of Incorporation: The formal document used to create the company.
• Bylaws: The internal rules governing the company.
• Commercial Register: Provides publicity and legal certainty.

The General Partnership

The first personalist company is the General Partnership, regulated by the Code of Commerce, articles 125–144. It is considered "personalist" because the identity and trust between partners are paramount. It involves two types of partners:

• General Partners: They invest capital, receive profits, bear losses, possess decision rights, and have unlimited liability.
• Worker Partners: They do not invest capital; instead, they contribute work, services, or know-how. They may receive profits but do not bear losses, and they are distinct from standard employees.

The Limited Partnership

The second type is the Limited Partnership, regulated by the Code of Commerce, articles 145–150. It consists of:

• General Partners: These are personalist partners who manage the business, hold decision rights, and have unlimited liability.
• Limited Partners: These are capitalist partners who primarily contribute capital, do not have decision rights, and benefit from limited liability.

Legal Personality and Representation

Case 1 also introduces legal personality. This concept means that an entity can possess rights and obligations, enter into contracts, and sue or be sued. Although a company is a legal person, it requires natural persons to act on its behalf, a process known as representation. For instance, a director signs a contract physically, but the company is the party legally bound.

Abuse of Legal Personality and the Corporate Veil

Finally, Case 1 explains the abuse of legal personality or the corporate veil theory. Normally, a company is a separate entity from the individuals behind it. However, if someone uses the company fraudulently to evade debts or responsibilities, a court may ignore that separation—"piercing the veil"—to hold the individuals behind the company liable.