Economy

Difference between corporation and limited liability

We can say that, corporation and limited liability are legal figures that are used as a nomenclature for the formation of companies. Each of them has its own characteristics that determine its specific functions and define its scope.

In this article we will present a clear and precise description of both nomenclatures, in order to clarify possible doubts that the reader may have and be able to know their uses, functions and scope to finally highlight their differences.

Anonymous society

A public limited company (SA) is a legal figure that, within the legal regulations, constitutes a form of industrial property directed by one or more persons. Its main characteristics are to be a purely capitalist society, in which capital is the most important element. Therefore, it is the legal form that best suits the needs of large companies.

Likewise, public limited companies require two or more persons for their constitution and both natural and legal persons are valid. There is no limit of partners for an SA, but there are very specific cases where formation by a single member is allowed, so it would be a sole proprietorship.

In public limited companies, the liability of the partners is limited exclusively to the contributed capital, which varies from one country to another. This social capital is usually divided into nominative or bearer shares. Apart from this, there are various ways to create this type of company, these can be by simultaneous foundation, where all the shares are disbursed at the time of creation or successively, where the shares are disbursed successively.

Limited Liability

A limited liability company (SRL) is a type of legal figure that, within the legal regulations, constitutes a company name directed by one or more people. For the constitution of this type of company, a minimum of one partner is necessary, although there may be more than one and a maximum of 50 in general, although it may vary from one country to another.

Likewise, when they are formed by a single partner they are called single-member limited companies, in these cases, the partner can be a natural or legal person. In an SRL, the liability of the partners is limited to the capital contributed, which means that they are only liable for the debts of the entity for the capital invested. In addition, this capital is divided into participations or social quotas, which are cumulative and indivisible equal parts of the capital of a limited liability company and which cannot be incorporated into negotiable titles nor can they be called shares.

In cases where it is desired to proceed with the transfer of shares or social quotas, the administrators must be notified of the intention to transfer, as well as the number of shares to be sold, the identity of the purchaser, and the agreed price. In these cases, the rest of the partners have priority for the acquisition.

According to the above, the differences between corporations and limited liability companies are:

Anonymous society Limited society
They settle for two or more members (no limits). They settle for 2 up to 50 members.
The capital is made up of shares. The capital is constituted by participations or social quotas.
The company name is abbreviated SA (stock company). The company name is abbreviated SRL (Limited Liability Company).
Liability is limited to the integration of the subscribed shares. The responsibility is limited to the integration of the fees that they subscribe or acquire.

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