Legal Framework for Limited Liability Companies

Characteristics of a Limited Liability Company (SL)

A Limited Liability Company (SL) is a commercial trade entity where the capital is divided into social parts. One of its primary features is that partners do not respond personally to social debts. It is characterized by its closed nature, meaning shares cannot be freely transmitted to outsiders without specific conditions.

Capital and Incorporation Requirements

The rules for an SL are more flexible than those for a Public Limited Company (SA). The minimum capital required is €3,012, which must be fully paid upon constitution. The company is unlisted and cannot be traded on the stock exchange.

Requirements for Constitution:

• Incorporation must be done through a public deed or in writing.
• The identity of all partners must be recorded.
• The specific contribution of each partner and their corresponding shares must be defined.
• The organizational structure and identity of administrators must be established.

Types of Contributions

Capital is formed by contributions divided into shares. These contributions can be monetary or non-monetary. For non-monetary contributions in an SL, an independent expert report is generally not required; however, the founding partners and those making the contribution are personally liable for the valuation. In the event of a capital increase, the same responsibility applies to partners and administrators.

Rights and Duties of Partners

Membership confers specific rights and obligations. Contributions are cumulative and indivisible. Partners are legally bound to maintain loyalty to the company, pursue market ends, and avoid conflicts of interest or competing with the administration.

Economic and Participation Rights

• Right to share in dividends and the liquidation surplus upon closure.
• Right to attend meetings (there is no minimum share requirement to attend).
• Right to information and voting.

Transfer of Shares

The transmission of shares is generally free between partners, spouses, ascendants, or descendants. If a partner wishes to transfer shares to third parties, they must report this to the Board. The company has three months to exercise a right of refusal; otherwise, the shares will be transmitted.

Corporate Governance and Administrative Bodies

The General Meeting

The General Meeting is responsible for management censorship, approving accounts, allocating results, naming administrators, and auditing. It also authorizes the modification of statutes, capital increases or decreases, and dissolution.

Meetings can be Ordinary or Extraordinary and must be published in a local newspaper or sent to the address of each partner. While there are no specific quorums for attendance, valid agreements require a majority representing at least 1/3 of the total votes. Special agreements (transformations, mergers, or capital changes) require a 2/3 majority.

The Administrative Body

Administration can be structured in four ways, including Joint or Several Administrators (2 or more) or a Board of Directors. Administrators serve indefinitely unless the Board otherwise states. Accessory prestations may be provided by individuals who are not members.

Partnership Limited by Shares

A Partnership Limited by Shares is a capital company similar to an SA where capital is divided into shares. It involves collective partners who are in charge of administration and are personally liable for social debts. Other partners make contributions and gain membership but do not necessarily manage the entity or answer for debts beyond their contribution.