We explain what a legal entity is and how it differs from a natural person. Also, the types of legal entity and some examples.
What is a legal entity?
A legal person or legal entity It is a legal entity or institution that does not correspond to a citizen, but rather to an organization, society or company with or without profit.
It is about ideal people, that is, those who do not have physical existence, but who are endowed with legal rights and obligations. Furthermore, they are born in accordance with a legal act or act of constitution, that is, a legal event recognized by administrative organizations and authorities, which appears in public records and meets certain conditions before the law.
These types of entities share many of the duties and rights of natural persons, except in the case of criminal offenses, since these can only be attributed to natural persons who are directly responsible for them. Even so, the law can apply sanctions to a legal entity involved in criminal acts, which normally corresponds to administrative law.
When were the first legal entities created? Legal personality is relatively recent in the legal field. It does not have a direct equivalent in Roman law, although in ancient times it was spoken of personae vice fungiturthat is, of institutions that carried out tasks similar to those of natural persons. The first mention of a legal entity itself took place at the end of the 18th century.
Types of legal entities
Normally, a distinction is made between two forms of legal entities:
Legal entities under public law
Legal entities under public law are those that represent the entities of the State and who look after the public. They can act within the territory of a country and only for the citizens who live there, or as mediators between the State and international actors.
This type of legal entities can be classified, therefore, into legal entities of internal public law (those that act within the country) and legal entities of external public law (those that act outside the country).
Legal entities under private law
Legal entities under private law are those that represent particular interests in accordance with the provisions of specific legal codes, such as associations, companies, cooperatives and civil commercial societies, among others.
Differences between legal entity and natural person
Legal entities and natural persons are different legal entities, despite both being legal figures recognized before the State. Their fundamental difference has to do with the scope and extension of their rights and duties.
For example, a legal entity can be made up of different natural persons or even other legal entities. For its part, a natural person necessarily corresponds to a citizen.
Therefore, a natural person is not subject to certain financial and corporate regulations exclusive to legal entities: they cannot operate as a public limited company, limited liability company or partnership, nor do they need to demonstrate their initial capital before undertaking their activity. However, a natural person is subject to criminal considerations, to which legal entities are not.
These differences can be summarized as follows:
| Artificial person | Natural person |
|---|---|
| It is equivalent to an organization, institution or company, for-profit or non-profit, without a physical presence. | It is equivalent to a citizen, that is, an individual or a human person with physical presence. |
| Face civil and administrative responsibilities. | Face civil and criminal liabilities. |
| In the event of debt or bankruptcy, you are legally responsible with the assets of the company and not with the assets of its investors. | In the event of debts, you are legally responsible with your personal assets. |
| It is born with a founding act in accordance with the laws. | It is born when the individual comes of age. |
Examples of legal entity
Some examples of legal entities are:
- International technology companies, such as Hewlett Packard, Microsoft, Samsung and Huawei.
- Transnational automobile companies, such as Honda, Ford, Chevrolet, Renault and Seat.
- Non-Governmental Organizations (NGOs), such as Amnesty International, Greenpeace, WWF International and BRAC.
- International banks, such as Deutsche Bank, Santander Río, BBVA, ICBC and HSBC.
- Shops, stores of different types, mutual associations and transport companies.
- Insurers, finance companies and other organizations that depend on credit.
References
- Lyon, A. (2006). Legal entities. UC Editions.
- Royal Spanish Academy. (2023). Artificial person. Dictionary pan-Hispanic of legal Spanish. https://dpej.rae.es/
- Suárez Franco, R. (2010). General theory of legal entities. Themis.
