What is a Limited Company

A public limited company is a commercial company with legal personality, in which the capital is divided according to the contributions of each partner.

The name of said company must include the indication “Sociedad Anónima” or the abbreviations “SA”. In some countries, this type of company is usually called Variable Capital Stock Companyand is abbreviated as follows: SA de CV

The capital of said company is distributed through shares that confer on its owner the status of partner.

The fundamental characteristic of the public limited company is that the partner only contributes the capital and does not personally respond to the corporate debts, risking only the contribution of the subscribed shares without compromising its corporate assets.

This means that the social obligations are guaranteed by a certain capital and the partners are bound by the amount of their share.

The shares grant economic and political rights within the company to the shareholders, who differ from each other by the nominal value of the shares or the types of rights that each share grants.

Types of limited company

closed joint stock company

The closed corporation is characterized by being made up of less than 20 shareholders. It is not registered in the Public Registry of the Stock Market.

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Likewise, the closed stock company does not resort to public savings; their contributions are merely private since they come from the founders of the company.

open joint stock company

The open stock company is identified by resorting to public savings in search of financing, either to establish capital or increase it. It also seeks to register its shares in the Public Registry of Securities in order to list the shares on the stock market.

Advantages of a limited company

The public limited company is one of the ways to establish a company since there are others such as the limited liability company or cooperative society, each with its advantages or disadvantages. Some of the advantages of the limited company are:

  • the liability of the partners is limited by their contributions;
  • creditors have rights to the corporation’s assets and not to the personal assets of the shareholders;
  • the transfer of shares can be done through sale without the need to dissolve the incorporated company;
  • It does not contemplate a maximum number of partners.

Disadvantages of a limited company

In the same way, the following aspects can be observed as disadvantages of the public limited company:

  • cumbersome procedures;
  • high costs for its constitution;
  • decision-making is usually slow, since there must be a prior debate with the shareholders’ meeting, followed by a vote.

See also Decision making.

Constitution of a limited company

To form or establish a corporation, a public deed must be made with its so-called bylaws, as contemplated by the commercial code of each country. A corporation is made up of three bodies:

  • the general meeting of shareholders or general assembly of partners;
  • the administration of the company, and
  • the supervisory council.
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Likewise, a minimum number of partners or shareholders and a minimum share capital or capital subscription must be determined. The constitutive document of the public limited company must establish the statutes in a clear, objective and detailed manner.

In Mexico, the corporation is governed by the General Law of Commercial Companies and, in Spain for that of Capital Companies Law.

General meeting of shareholders or general assembly of partners

The general meeting of shareholders or general assembly of partners is the administrative and supervisory body of the corporation. The meeting is held ordinary or extraordinary.

Ordinary meetings are held once a year to discuss financial issues, distribution of dividends, appointment of new directors, among other points; Extraordinary meetings are held urgently when the meeting or partners request it to deal with issues that justify the interests and future of the company.

Company administration

The administration of the company is the representative body of the same and is in charge of the executive part of the company.

Supervisory board

The Supervisory Board is the entity responsible for supervising the administrators.

See also: Commercial company.

Difference Between Stock Company and General Partnership

The general partnership differs from the public limited company since the liability is unlimited, that is, in the event that the assets of the company are insufficient to cover the payment of a debt, the partners must respond with their own assets for the payment of The duty.

That is why the general partnership has gradually disappeared due to the lack of a limit of liability on the part of the partners or shareholders.

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