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What other types of commercial company exist?

 Alongside private limited liability companies, by far the most commonly employed corporate form, there are other types of commercial company:

  • General partnership
  • Limited partnership (simple or by shares)
  • Public limited company

It is important to reach the right decision as to the most suitable form of company, in accordance with the type of activity desired to undertake and other individual circumstances. Before reaching this decision, consult a notary, who will provide with the necessary advice free of charge.

It is essential to know whether you wish to limit the asset liability of the shareholders, meaning that they are liable before potential creditors only with their contribution to the company, or if you do not wish this effect to apply, in which case the shareholders will be liable for corporate debts with all their assets.

If the company does not wish to limit the liability of all the shareholders, it may opt from among the following forms of company:

  • General Partnership (S.C.)
  • Simple Limited Partnership (S. Com.)
  • Limited Partnership by Shares (S. Com. p. A.)

If the company wishes to limit the liability of all the shareholders, then the choice would focus on a public limited liability company (SA) or private company (SL, SRL), which are most commonly used in commercial dealings. The private limited liability company is specifically, by a huge margin, the most commonly chosen when deciding on a corporate model.

Single member companies:

Another option that should be taken into account when operating by means of a company is the possibility of founding a single member company, which is created by just one shareholder or, having been incorporated by two or more shareholders, sees all its shares or stock transferred to the ownership of just one shareholder. This option is permitted in Spanish law for both private limited liability and public limited companies.

Single member limited liability companies operate commercially as any other, although their single member status must be recorded both in the Companies Register and on all the documentation, correspondence, order notes and invoices, and all announcements that must be published in accordance with the provisions of the law and articles of association.

There are also special rules as regards the documentation of the resolutions passed by the single member of such a company, who exercises the powers of the General Meeting, and as regards the form and effects of contracts entered into between the company and the single member, as they will need to be recorded in writing or in the documented manner demanded by the law in accordance with the nature thereof, and will be recorded in a register book of the company which must be legally approved in accordance with the provisions for corporate registers of minutes, express and individual reference to such contracts likewise being included in the annual report.

Warning:
If a company that has been incorporated by two or more shareholders and has acquired single member status does not comply within a period of six months with the obligation of registration of its new status in the Companies Register, the single member will be subject to personal and unlimited liability, in other words with all his assets, for any corporate debts entered into during the period of single member status.

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