Legal Structures and Business Entities: SA, SL, and Sole Proprietors

Defining Legal Persons and Entities

Natural Person (Individual)

A natural person is defined as a human being who is alive (often legally defined as having survived more than 24 hours after birth).

Legal Person (Entity)

A legal person or entity is an organization or association (often requiring members to be 18 years or older) capable of forming a company or undertaking legal obligations.

Individual Entrepreneur (Sole Proprietor)

An Individual Entrepreneur is a natural person who is of legal age and possesses full legal capacity to act.

Key Characteristics of Sole Proprietors

• Requires the existence of habitual (regular) business activity.
• Always acts on their own behalf and assumes personal liability.
• Subject to Individual Income Tax and other applicable taxes.
• Must be registered under the self-employed regime in Social Security (SS).

Sociedad Anónima (SA) - Stock Corporation

A mercantile society where capital is divided into shares, comprising contributions from partners.

SA Requirements and Features

• Often associated with the Stock Exchange (Bolsa de Valores).
• Liability is limited to the money invested in shares.
• Incorporation requires a minimum capital of €60,101.21, with at least 25% disbursed upon formation.
• There is no limit on the number of members (shareholders).
• Decisions are taken at the General Shareholders' Meeting (Junta General de Accionistas).
• Shares represent numeric values and theoretical contributions.
• Shareholder rights include receiving dividends, transferring shares, subscribing to new shares, and voting.

Sociedad Limitada (SL) - Limited Liability Company

A commercial company where capital is divided into participations (quotas) of different social value.

SL Features and Administration

• Liability is limited to the member's contribution to the company.
• Contributions are made through the subscription of these participations.
• The company is subject to all corporate tax obligations.
• There are generally no limits on the number of members.
• Decisions are taken at the Annual General Meeting of Members.
• Administrators do not necessarily have to be partners.

Management Structure Options for SL

• Sole Administrator (1)
• Joint and Several Administrators (2)
• Joint Administrators (Multiple)
• Board of Directors (3 or more)

Cooperative Society (Sociedad Cooperativa)

These companies are managed democratically by their members. Voluntary membership implies a commitment to active participation.

Cooperative Function and Classification

The primary function is to provide a minimum level of activity for its members, conducted cooperatively, depending on the cooperative's classification (e.g., Grade 1 or Grade 2).

Franchising: Contractual Business Model

Franchising is a contractual agreement by which a parent company (the franchisor, e.g., "Jijonenca") grants a small company or an individual entrepreneur (the franchisee) the right to conduct business under specific, predefined conditions.