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  • Jaime Deschamps

Corporate law intro II - Social types, capital and people corporations.

Updated: Apr 15, 2023

Within commercial societies, capital societies and personal societies are distinguished. In the first, the most important thing is the contributions/assets that the society has and not who its members are, and the way of dividing the property is done through shares. In the second, the most important thing is who the members of the society are and not the assets they have, and the way of dividing the property is done through partnership shares.

In personal societies, partners are generally responsible for the society's obligations with their own personal assets, and in capital societies, shareholders' responsibility is generally limited to the investments made. Within capital societies, we find: the anonymous society and SAPI (regulated in LMV for historical reasons that will be analyzed).

Within mixed societies (meaning, they have some characteristics of personal societies and some of capital societies), we find: the limited liability society, the simplified joint-stock society, the simple partnership society and the partnership society by shares. Within purely personal societies, we find the collective name society (the cooperative society will not be the subject of analysis for the purposes of these publications). In my opinion, the only societies that have practical utility currently are:

  • Promoting Investment Anonymous Society: the best option, as it is the most flexible society and the most friendly to investment.

It is regulated in a practically equal way to the anonymous society, except for some distinctions that we will see in more detail later, such as:

  • Obligation to have a board of directors.

  • Lower percentages for minority rights.

  • Possibility of agreeing on a "non-compete" clause.

  • Possibility of limiting or expanding profits for some class of shareholders and;

  • Possibility of buying its own shares (they become treasury shares).

  • Anonymous Society: Almost as flexible as SAPI, also a great option for starting a business.

  • Limited Liability Society: Although it is a mixed society and less flexible than the anonymous society and SAPI, it allows limiting the partners' responsibility to the investments/contributions that they are required to make. It has the advantage that it does not require a commissioner and can have tax advantages if it is a subsidiary of a US company, as it can operate as a transparent society.

Simplified Joint-Stock Society: For very basic purposes, although we do not recommend it at all and think that it requires a wide modification. Advantage - Free, only requires one shareholder and it can be established online. Many disadvantages to be analyzed.

To be continued...

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