Choosing Your Business Structure: S.L. vs. S.A. Company Types

Limited Liability Company (S.L.)

A capitalist company structure, ideal for businesses with a limited number of partners and moderate capital requirements.

General Characteristics of an S.L.

• The number of partners can be one or more. Single-member companies are known as sole proprietorships.
• The partners' liability is limited to their capital contribution; they are only responsible for the capital invested.
• The share capital is divided into shares. It must not be less than €3,000. At the time of incorporation, the capital must be fully subscribed and paid; no unpaid liabilities (unpaid portions) are permitted. Capital can be contributed in cash, property, or rights.
• The corporate name must be followed by "S.L." or "S.R.L." (Sociedad de Responsabilidad Limitada).
• For the transfer of shares, administrators must be notified of the intent to transfer, the number of shares, the acquirer, and the price. Existing partners have preemptive rights. The transfer must be formalized in a public document.
• Subject to Corporate Income Tax.

Governing Bodies of an S.L.

• General Meeting: This is the deliberative and decision-making body. Topics include the analysis of management, approval of annual accounts and profit distribution, appointment and dismissal of administrators, and modification of bylaws. All members, including those who did not participate in the meeting, are bound by the agreements of the General Meeting.
• Administrators: The administration can be entrusted to a single person or a Board of Directors.

Public Limited Company (S.A.)

A capitalist company where capital is the sole important element. This structure is best suited for large companies.

General Features of an S.A.

• The number of partners can be one or more, whether natural or legal persons. Single-member companies are known as sole proprietorships.
• Liability is limited to the capital contributed.
• The capital is divided into equal parts, and each part is called a share. These shares can be represented by certificates or by book entries.
• The minimum capital required is €60,000. This can be divided into nominative or bearer shares. It can be created by simultaneous formation (all shares are disbursed at the time of foundation) or successive formation (shares are disbursed gradually). At the time of incorporation, the capital must be fully subscribed, and at least 25% must be paid.
• The company name is formed by the name of the company followed by "S.A." (Sociedad Anónima).
• The transfer of shares is generally free.

Governing Bodies of an S.A.

• Shareholders: (This section in the original document was incomplete, typically an S.A. also has a General Meeting of Shareholders and a Board of Directors/Administrators.)