Corporate Lawyers

The limited joint-stock company is an intermediate type of company between the simple limited partnership and the public limited company.
In some European countries, the limited joint-stock company is an alternative to the public limited company, since the attribution of personal liability to the administrators may lead one to believe that they will assume fewer risks in the management of the company.
However, in Spain, despite the new regulation, this type of company is hardly used in practice, since in our country the alternative to the public limited company is the limited liability company.

Concept and characteristics

This is a limited partnership in which the capital, which is formed by the contributions of all the partners, is divided into shares and in which at least one of the partners has the status of general partner, being personally liable for the company debts incurred during the period of its management.

Capital

• The capital is divided into shares and is made up of the contributions of all the members. Thus, the general partners also hold their stake in the entity's capital through shares.
• By reference to Article 152 of the CCom to the LSA, the minimum capital is 60,101.21 euros.
• The legal regime of the capital and shares is subject to the rules established for public limited companies.

Article.47-92.te LSA

Liability system. In limited partnerships by shares there are 2 types of partners:

• General partners. They are personally and unlimitedly liable with all their assets.
• Limited partners. They are liable up to the limit of the contributions made.

Status of the shareholder

Irrespective of the name and liability of the partners in the limited joint-stock partnership, they all have the status of shareholders. They all participate in the general meeting, the body through which the company's will is expressed.

Differences between a general partner and a general partner of another company

• General partners are those who, due to their status as directors, are unlimitedly liable for the debts that arise. They must make contributions to the share capital that can be valued economically. This excludes both personal work and services. In contrast to this situation, in limited partnerships and general partnerships, it is possible to have partners who only contribute work.
• In this type of entity, the directors must be general partners. However, in the other two partnerships mentioned above, it is possible to have general partners who are not directors.
• Both in the general partnership and in the limited partnership, the status of general partner is of origin. This is not the case in the limited joint-stock partnership, where the status of partner is acquired upon acceptance of the position of director
• General partner and non-voting shares The majority doctrine considers that general partners cannot be holders of non-voting shares. This would be logical, if we take into account the following arguments:
  • It does not seem that the figure of the non-voting shareholder and that of the general partner go well together, if we take into account that the profile of the former is that of a shareholder who has little interest in the management of the company and who, in principle, is motivated by savings interests.
  • Admitting this figure would be tantamount to eliminating the possibility of amending the statutes. This is because to do so requires the unanimous and express consent of all the general partners.

The partnership is the oldest of the Spanish trading companies.
It is a type of company that is usually used in small companies formed by a small group of people, among whom there is a high degree of mutual trust.
In practice, it is rarely used due to the liability regime, as all partners are personally and unlimitedly liable for the company's debts.
General partnership is a partnership of a personal nature which, in a collective name and under a company name, carries out an economic activity or commercial industry for which all the partners are personally, unlimitedly, jointly and severally liable for the company's debts.

Limited Partnership

The limited partnership is a partnership which, in a collective name and under a company name, carries out an economic activity for the consequences of which the two types of partners who coexist in the partnership are liable in different ways:

• The general partners, who are personally and unlimitedly liable with all their assets and are responsible for the management and administration of the partnership.
• Limited partners.

They are liable up to the limit of the contributions made and may not carry out any act of administration of the company's interests. If a limited partner includes his name or consents to its inclusion in the company name, he is subject, with respect to persons outside the company, to the same responsibilities as the managers, without acquiring any rights other than those corresponding to his status as a limited partner. Compared to other partnerships, this type of company has the advantage that it enables capital to be contributed by partners who only wish to limit their liability to the contributions made and who dissociate themselves from the management of the company and, on the other hand, allows the general partners to receive this capital contribution without losing control of the company, since they alone are responsible for the management and administration of the company.

Characteristics

According to this definition, limited partnerships are characterised by the following:

• There are two types of partners: general partners and limited partners
  General partners are personally and unlimitedly liable with all their assets and are responsible for the management and administration of the company. Limited partners, on the other hand, are liable up to the limit of the contributions made and may not carry out any act of administration of the company's interests. If a limited partner includes his name or consents to its inclusion in the company name, he is subject, with regard to persons outside the company, to the same responsibilities as the managers, without acquiring any rights other than those corresponding to his status as a limited partner.
• Personal nature.
  The company is formed "intuitu personae", i.e. in accordance with the personal and property conditions of the partners.
  In the case of general partners, this personal nature is expressed in the same way as in the general partnership. Thus, no general partner may transfer his or her interest in the company to another person, or substitute another person for him or her in order for him or her to perform his or her administrative functions, without the prior consent of all the other partners.
  However, this is less relevant for limited partners, mainly because of the limitation of liability that characterises them and their exclusion from the management of the company.
  Moreover, the transfer inter vivos of the status of limited partner - which constitutes a modification of the company contract - does not necessarily require the consent of all the other partners and, on the other hand, neither the death of the limited partner nor the opening of the liquidation phase in the insolvency proceedings of the limited partner is a legal cause for dissolution of the company, unlike in the case of general partners.
• It operates under a company name consisting exclusively of the names of the general partners.

According to art. 1 RD Leg. 1/2010, of 2 July, which approves the revised text of the Capital Companies Act, in the public limited company, the share capital, which is divided into shares, is made up of the contributions of all the shareholders, who are not personally liable for the company's debts.

The basic features of public limited companies are as follows:

• Company of a commercial nature. The public limited company, whatever its object, is of a commercial nature (art. 2 LSC).
• Capitalist company, whose capital, divided into shares, is made up of the contributions of the shareholders (art. 1.3 LSC).
• The minimum capital is 60,000 euros, expressed in that currency (Art. 4.2 LSC).
• The shareholders have limited liability, i.e. they are only obliged to pay for the shares they subscribe, but are not personally liable for the company's debts (art. 1.3 LSC).

It is the company which, once registered, is bound by the acts and contracts it enters into. For this purpose, the following should be borne in mind:

• For the acts and contracts essential for the registration of the company, for those performed by the administrators within the powers conferred on them by the deed for the phase prior to registration and for those stipulated by specific mandate by the persons appointed for this purpose by all the partners, the company in formation shall be liable with the assets formed by the contributions of the partners. The partners are personally liable up to the limit of what they have undertaken to contribute.
  However, if the date of commencement of corporate operations coincides with the date of execution of the articles of association, and unless the articles of association or the articles of association provide otherwise, it shall be understood that the directors are already empowered to fully carry out the corporate object and to perform all kinds of acts and contracts, for which the company being formed and the shareholders shall be liable under the terms indicated above (Art. 37.1 LSC). 37.1 LSC) In certain cases, in accordance with the doctrine of the lifting of the veil, liability for company debts can be derived from the shareholders, thus avoiding situations of fraud or damage to public or private interests.
• On the other hand, in sole proprietorships, the sole shareholder is personally, unlimitedly and jointly and severally liable for the company debts incurred during the period of sole proprietorship. Once the sole proprietorship is registered, the sole shareholder shall not be liable for debts incurred thereafter.

Limited liability companies are commercial companies and can be defined as a group of persons with the purpose of carrying out an economic activity with the aim of obtaining and distributing profits.

However, the constitution of a single-member limited liability company was admitted, as stated in Explanatory Memorandum IV of Law 2/1995 of 23 March 1995 on Limited Liability Companies, "(...) In this matter, two radically different conceptions have traditionally clashed: for some, the single-member company, whether original or supervening, should only be a legal channel for the requirements of small and medium-sized companies. For others, on the other hand, the general admissibility of the single-member company is nothing more than a tribute to the sincerity that all legislators must display when they notice a divorce between reality and the law being legislated, to use the well-known words of the Explanatory Memorandum to the 1951 Act, so that the new law, In the opinion of this second current, the new law should not only admit and regulate the single-member limited liability company, but also the single-member public limited company, which should be given a legal status in the law itself, making the exception currently contained in the Public Limited Companies Act for public companies a rule.

Between these two conceptions, the law is decidedly oriented towards the second, admitting the original or supervening single-member company status for both limited liability companies and public limited companies. Although the impetus given by Directive 89/667/EEC of 21 December is intended to meet the needs of small and medium-sized companies - as recognised in the Preamble - the text of the Directive, which is transposed into national law by this law, does not prevent large-scale initiatives from being incorporated under sole proprietorship, thus meeting the needs of all types of companies. In line with this approach, it is expressly accepted that a single-member company can be set up by another company even if the founding company is itself a single-member company, while the concept of single-member company is extended to cases in which the ownership of all the shares or holdings in the company corresponds to the shareholder and the company itself".

Among its fundamental characteristics, we can highlight the following general postulates, which were included in the Explanatory Memorandum II of Law 1995/13459 of 23 March 1995 on Limited Liability Companies:

• Hybrid nature. In the limited liability company, personalist and capitalist elements coexist in harmony, characteristics that we can deduce from art. 1 RD Leg. 1/2010, of 2 July, which approves the revised text of the Capital Companies Act. As pointed out by Chacón Blanco, La Sociedad de Responsabilidad Limitada. Cien preguntas clave y sus respuestas. Quantor, Madrid, 2008, "we are essentially dealing with a capitalist type of company (like the public limited company) given that the partners, in principle, do not assume any obligations other than that of contributing the capital and their personal characteristics do not prevail. However, unlike the public limited company, the private limited company has obvious personalistic features, because it normally brings together a limited number of partners, who know each other, who frequently contribute their work or services to the company and, furthermore, the legal regulation itself incorporates personalistic elements. For this reason, it has been said that the limited company is a limited company without shares and of small size, although with more personalistic elements, an idea that the Law, to a large extent, confirms".
  The limited liability company, whatever its object, has a commercial nature, as established in Article 2 of the LSC.
  The shareholders are not personally liable for the company's debts and the share capital, which is divided into shares, may not be incorporated in securities or represented by book entries.
  In certain cases, in accordance with the doctrine of piercing the veil, liability for corporate debts can be derived from the shareholders, thus avoiding situations of fraud or damage to public or private interests.
• Essentially closed character. Closed character is manifested in:
  • The transfer of company shares is restricted, except in the case of acquisition by shareholders, spouses, ascendants or descendants of the shareholder or group companies and, unless the articles of association stipulate otherwise (articles 51 to 56 LSC).
  • Representation at meetings of the general meeting is restrictive in nature, unless otherwise provided for in the articles of association.
• Flexibility in the legal regime, derived from the legislator's concern to establish a simpler and less costly legal regime than that of the public limited company. This flexibility allows the autonomy of will of the shareholders to adapt the applicable regime to their specific needs and conveniences.

  In addition to the imperative minimum, there is an extensive set of supplementary rules of private will, which the shareholders can derogate from by means of appropriate provisions in the articles of association. The articles of association can increase the degree of personalisation, e.g. by supplementing the general principle of adoption of resolutions by a majority of the capital with the requirement that a certain number of shareholders vote in favour; They can also modify the regime for the transfer of company shares, choosing between requiring the consent of the company or establishing a preferential right of acquisition, or intensifying the closed nature inherent to this corporate form; or, among other examples, they can replace the legal regime of publicity of the notice of the meeting or determine the specific duration of the office of director, which is otherwise legally set for an indefinite period of time.

  As a limit to the autonomy of the shareholders' will, the law prevents the limits that distinguish it from the public limited company from being exceeded, and in this sense the closed company nature is essential, so that, unlike shares, the company shares cannot be freely transferable in general. On the other hand, and for the same reason, this company form must be prohibited from anything that involves recourse to collective savings as a direct means of financing, hence the impossibility of setting up the company by successive foundation or increasing the capital by means of a public offering of shares, but also the prohibition on issuing bonds or debentures, or the severe restriction on the acquisition of own shares.

  Characters similar to those of the public limited company:
  The limited liability company has similar characteristics to the public limited company, whose legal regime is applicable to the cases expressly referred to in the Law:

  • The commercial nature of the company, whatever its object.
  • The limited liability of the shareholders, who are not unlimitedly liable for the company's debts but, as in the case of the public limited company, liability only extends up to the limit of their contributions (SC ruling of 21 May 2002).

   

  However, the Law includes several special cases regarding the liability of the partners:

  • a) Liability towards third parties, being applicable the general principle of universal liability for debts contained in Art. 1911 CC.
  • b) In the case of non-monetary contributions - Art. 43 LSC - the founding shareholders, the persons who hold the status of shareholder at the time of the adoption of the resolution to increase capital and those who acquire any paid-up shareholding through non-monetary contributions, jointly and severally liable to the company and to third parties for the reality of such contributions, as well as the directors for the difference between the valuation they have made in compliance with the provisions of Art. 136 LSC and the real value of the non-monetary contributions.
  • c) Special positions: company in formation -art. 27 LSC, which contains a reference to arts. 36 to 40 LSC-, reduction of share capital by restitution of contributions -art. 149 LSC- in which case each shareholder is limited to the amount received by way of restitution of the share contribution, and finally the case of liability of separate or excluded shareholders -art. 201 LSC-, in which case the liability regime for company debts established for the case of reduction of capital by restitution of contributions is applied.
• Similar corporate structure
  Distinguishing features of the public limited company
  The limited liability company differs from the public limited company in the following respects:
  • Closed nature of the company.
  • Prohibition of anything that involves recourse to collective savings as a direct means of financing. These are consequences of this premise:
    • The impossibility of incorporating the company by the successive foundation system.
    • The prohibition to increase the capital by public offering of shares.
    • The prohibition to issue debentures or bonds (art. 23 LSC).
  • Requirement of full payment of the shares. The capital may not be less than 3,000 euros and must be fully paid up from the outset (art. 4 LSC).
  • Establishment of joint and several liability for the reality and valuation of non-monetary contributions (art. 43 LSC).
  • Broad regulation of the shareholder's right of withdrawal, which is regulated in Articles 164 to 166 LSC, and express recognition of the right to request the withdrawal of liquidators (Article 192 LSC).

Temporary Joint Venture

The Temporary Joint Venture is a system of collaboration between companies for a certain period of time, determined or undetermined, for the development or execution of a work, service or supply. The companies join together and form a joint venture to carry out a specific project when they do not have the economic capacity or sufficient resources to carry it out individually.

The Temporary Joint Venture does not have its own legal personality, constituting a simple contractual form of business collaboration that is subject to a special tax regime. Despite this, it is understood that a new autonomous company arises from this association, subject to a single management and with a name that will be that of one, several or all the member companies, followed by the expression Unión Temporal de Empresas.

The fact that it lacks legal personality cannot be translated into an inability to be a party to a lawsuit, nor can such lack of personality be invoked in order to protect itself under the "veil" of the "legal form".

There are different reasons that can lead to the formation of such an association:

• Techniques. In this way, the members of the union benefit from the possibility of benefiting from each other's knowledge and experience. The pooling of members' resources enables them to achieve their objectives more easily.
• Financial. A joint venture can obtain bank loans under more favourable conditions than those that its members would obtain individually. Moreover, this system of collaboration makes self-financing possible.
• Organisational. Collaboration allows the experience and activity of the participating companies to be pooled through a common body. In this way, greater efficiency is achieved in the execution of the project.
• Economic and fiscal. The fact that collaboration makes it possible to reduce costs makes it possible to present a more attractive and advantageous offer. In addition, it should be borne in mind that the risks are distributed among several companies, which makes it easier to obtain guarantees or other guarantees that may be required. Nor should we forget the fact that they are subject to a special tax regime.

Worker-owned companies are those public limited companies or limited liability companies in which the majority of the capital is owned by the worker shareholders.

Public limited companies or limited liability companies are classified as worker-owned companies when:

• The majority of the share capital is held by the employee shareholders.
  However, co-ownership of parts of the capital is permissible, so that several working partners own a single part of the capital or several parts of the capital pro rata.
• The partners provide personally and directly paid services for the company. The remuneration may consist of: money, remuneration in kind or a mixture of both.
• The partners are bound to the company by an employment relationship for an indefinite period of time. Services may be rendered on a full-time or part-time basis. Only certain percentages of total hours per year worked are set as a limit.
  Worker-owned companies are created with the aim of achieving new methods of job creation, while at the same time encouraging employee participation in the company.
  In addition, as an employment promotion measure, aid is provided to support employment in worker-owned companies.

Characteristics

The main characteristics of Worker-owned companies are as follows:

• The majority of the share capital is owned by workers who provide personally and directly paid services and whose employment relationship is for an indefinite period of time. article.1.1 Law 4/1997 of 24 March 1997.
• These are companies that have been classified as workforce owned companies. Article.1.1 Law 4/1997 of 24 March 1997.
• The number of hours per year worked by workers contracted for an indefinite period who are not shareholders may not exceed 15% of the total number of hours per year worked by the worker shareholders. If the company has fewer than 25 worker-members, this percentage may not exceed 25% of the total number of worker-member hours worked per year. For the calculation of these percentages, workers with a fixed-term contract and workers with a mental disability equal to or greater than 33% with an indefinite-term contract will not be taken into account.
• Its name must include the words "Labour Public Limited Company" or "Labour Limited Liability Company" or their abbreviations SAL or SLL, as appropriate. Article.3.1 Law 4/1997 of 24 March 1997.
• The name of the company must be stated in all its documentation, correspondence, order notes and invoices, as well as in all the advertisements that it has to publish by legal or statutory provision. article.3.3 Law 4/1997 of 24 March 1997.
• The acts determined in the Worker Owned Companies Act and its implementing regulations, must be recorded in the Register of Worker Owned Companies, created in the MTAS, for administrative purposes. Article.4.1 Act 4/1997 of 24 March 1997.
• The share capital is divided into registered shares or holdings. Article.5.1 Law 4/1997 of 24 March 1997.
• There are two types of shares and holdings in Worker-owned companies: labour shares, which are owned by employees whose employment relationship is for an indefinite period, and general shares, which are the remaining shares. Article.6.1 Law 4/1997 dated 24 March 1997.
• The creation of worker class shares without voting rights is not valid. Article.5.2 Law 4/1997 of 24 March 1997.
• In the case of "Labour Public Limited Company", the shares must necessarily be represented by means of individual or multiple, sequentially numbered certificates, on which the class to which they belong must be indicated, in addition to the general information required. Article.6.2 Law 4/1997 of 24 March 1997.
• Except in exceptional cases, none of the shareholders may own shares or holdings representing more than 1/3 of the share capital. article.5.3 Law 4/1997 of 24 March 1997.
• This regulates the right of pre-emptive acquisition in the event of voluntary "inter vivos" transfer of shares or holdings in companies belonging to the employee class. Article.7.1- Law 4/1997 of 24 March 1997.
• Likewise, the right of preferential acquisition in the event of voluntary transfer "inter vivos" of shares or company holdings belonging to the general class is regulated. Article.7.8 Law 4/1997 of 24 March 1997.
• The Articles of Association, in the event of the death of the worker shareholder, may recognise a preferential acquisition right over worker class shares or holdings. Article 11.2 Law 4/1997 of 24 March 1997.
• The appointment of the members of the Board of Directors is necessarily carried out using the proportional system regulated in the Public Limited Companies Act, except in the case where there are only worker shares or holdings, as they may then be appointed using the majority system.
• Worker-owned companies are obliged to set up a Special Reserve Fund, which must be endowed with 10% of the net profit for each financial year, and which can only be used to offset losses if there are no other reserves available for this purpose. Article 14 Law 4/1997 dated 24 March 1997.

The incessant specialisation and complexity of professional activities of all kinds has recently led to the activities carried out by individual professionals being replaced by those carried out collectively by several professionals, thus favouring even more such specialisation, as well as the division and organisation of work.

A professional partnership, as a legal entity, is a company which, whether incorporated in any form provided for by law, i.e. as a general partnership, limited partnership, limited liability partnership, limited liability company, public limited company or any other type of company, has as its essential characteristic that its corporate purpose consists exclusively of the joint exercise of one or more professional activities, provided that they are not legally incompatible.

• Professional activity is understood to be that for which an official university qualification is required, or a professional qualification for the exercise of which it is necessary to accredit an official university qualification and registration with the corresponding professional association.
• A professional activity is carried out jointly when the acts inherent to it are carried out directly under the company name or corporate name and the rights and obligations inherent to the exercise of the professional activity are attributed to the company as the holder of the legal relationship established with the client.
• In this way, a new scenario is emerging in the Spanish legal system for companies formed by certain professionals, such as architects, economists, engineers, dentists, psychologists, doctors, lawyers, solicitors, auditors and a host of other specialities.
  They are companies that provide professional services in the trade, essentially through the work carried out by the majority of their partners.
  They are therefore companies "stricto sensu", i.e. companies to which the exercise of professional activities is attributed, which are the subjective centre of the legal business that is established with the client or user, attributing to them the ownership of the rights and obligations of this relationship, and which are developed under a company name or denomination.
  For a period of one year from the entry into force of the Professional Companies Act, the acts and documents required for companies incorporated prior to its entry into force shall be exempt from Transfer Tax, in the form of corporate transactions and documented legal acts, and shall benefit from a 30% reduction in the fees that Notaries and Mercantile Registrars have to charge as a result of the application of the respective tariffs.

The fundamental characteristics of the civil law company (as distinct from the commercial company) are described in detail below:

• It is a contract.
  The Civil Code, which initially regulates the natural person, later regulates the legal person, where it establishes the distinction between those of public interest recognised by law, and on the other hand, associations of private interest, whether civil, commercial or industrial, which are governed by the company contract according to their nature.
  Subsequently, Title VIII of Book IV (Obligations and Contracts) is entitled "On the company". The systematic logic of the Civil Code includes the figure of the company in this place because it is a contract, in the same way as others that are regulated in the same Book, and to which the general provisions that are included in this book for contracts in general are applicable in the same way.
  This contractual nature must not be ignored or lost at any time, since it will subsequently qualify certain specific requirements and is a consequence only of its contractual nature. The partnership is a contract by which two or more persons undertake to pool money, goods or industry, with the intention of dividing the profits between them; a contract that brings together the capacities of two or more persons (hereinafter referred to as partners) to pool their labour and capital in order to achieve achievements that they could not have achieved individually. article.1665 CC.
• It is consensual.
  As we said, as a contract, it has those characteristics common to other contracts and, thus, it is consensual, because for it to be perfected, the consent of the contracting parties is sufficient, as well as the fact that the company comes into existence from the very moment the contract is signed.
  Article 1679 CC
  This implies that regardless of its form, the contract produces its effects and the obligations deriving from it from the very first moment.
• It is onerous.
  It is also onerous, insofar as the partners must contribute money, goods or industry and thus be able to form the social fund, participating in the profits or losses that may arise.
• It is plurilateral.
  It is a plurilateral contract, and only bilateral by accident, since plurality is an inherent characteristic of the company contract, since the basic idea is that the more people who join together to achieve the objective that could not be achieved individually, the better.
• It is preparatory.
  Finally, the last essential characteristic of this type of contract is that it is a preparatory contract, insofar as what it seeks is the objective of maximising profit by means of the members' contributions to the corporate fund.