Understanding Mercantile Companies: Types and Legal Framework

Mercantile Companies

Classification of Companies

Companies can be classified as either civil or mercantile. Partnerships can be further categorized into the following types:

• Collective Company
• Limited Partnership (Comanditary Company)
• Limited Partnership by Shares
• Limited Liability Company
• Anonymous Company (Corporation)

Companies can also be classified based on whether they are person-based or stock-based.

Concept of Mercantile Company

Article 35 of the Civil Code (CC) states that legal persons include associations of private interest, whether civil, business, or industrial, to which the law grants legal personality independent of that of each member. According to Article 36 of the CC, these legal persons are governed by the provisions relating to the partnership contract.

The provisions of the partnership contract are contained in Articles 1665 and following of the Civil Code for Civil Companies, and Articles 116 and following of the Code of Commerce for Mercantile Companies.

A company is a contract of association and coordination. The basic features of the company contract are:

1. Profit-Oriented: The company aims to make a profit. Profits are distributed among the partners according to their share in the company. Losses are also distributed accordingly.
2. Onerous: The contributions made by the partners (money, goods, work) give rise to their right to share in the profits.
3. Based on Mutual Will: The company is based on the partners' will to achieve a common aim and make common efforts towards it, known as "affectio societatis."

Types of Companies

To simplify, Civil Companies are those envisaged in Articles 1665 and following of the Civil Code. Mercantile Companies include:

1. Sociedad Colectiva (S.C.): Envisaged in Articles 125 and following of the Code of Commerce.
2. Sociedad Comanditaria (S.Com.): Envisaged in Article 145 and following of the Code of Commerce.
3. Sociedad Comanditaria por Acciones (S.Com.por A.): Envisaged in Act 1/2010 on Capital Stock Companies.
4. Sociedad de Responsabilidad Limitada (S.L.): Envisaged in Act 1/2010 on Capital Stock Companies.
5. Sociedad Anónima (S.A.): Envisaged in Act 1/2010 on Capital Stock Companies.

Legal Personality

A company has a legal personality that is distinct and separate from the personality of its partners. Therefore, the company is subject to its own rights and obligations, which should not be confused with those of its partners.

However, Article 1669 of the CC provides that companies will not have separate legal personality if:

1. The covenants are kept secret among the partners.
2. The partners act in their own name with third parties.