Limited company

In the commercial field, there are several types of commercial companies whose main objective is to be able to carry out a series of activities within the framework established by commercial law . One of them is the corporation which can act individually under its own name, address and assets.

What is a limited company?

A joint-stock company is a type of commercial company that also has a legal personality and where all the partners have a divided capital depending on their contributions to the company.

  • Characteristics of a limited company
  • Types
  • Business name
  • Objective of a limited company
  • How it is constituted
  • Commercial register
  • Tax regime
  • Organs
  • Company administration
  • Types of partners
  • Members’ obligations
  • Members’ rights
  • Advantages of a limited company
  • Disadvantages
  • Regulations by country
  • Examples

Characteristics of a limited company

Among the main characteristics of public limited companies we can mention the following:

  • It is characterized by having the abbreviation “SA” which is known as a corporate name.
  • They are also known by the name of a variable capital stock company , in this case, it uses the abbreviation A. de CV
  • All its capital is distributed through shares which are in the hands of each of the partners.
  • People who are members of a public limited company only contribute capital but do not have any type of responsibility for the possible social debts that may be generated.
  • Shareholders have a series of economic rights within the company thanks to their economic contributions.
  • The main body within a public limited company is known as the shareholders’ meeting .
  • It uses a one-man administration type .


Limited companies can be of two types.

  • Open stock company : this type of company is recognized because it uses public savings to obtain financing, in other words, it uses money from people outside the company through different means. Your shares can be transferred quickly.
  • Closed stock company : this is the best known type of stock company that has an established capital thanks to the contributions made by the partners who have founded it.

Business name

The company name is a denomination through which a company can be made known, this is a type of official name and of a legal nature that must be shown in all the documentation that was made to establish a legal entity . It is the means by which a commercial company can be known and that at the same time allows the identification of the legal person and the members that make up a certain company.

Objective of a limited company

There are several objectives that the formation of a public limited company has, the main one being to achieve a financial objective . In addition, it is used to be able to carry out an expansion of all the operations carried out by a company, to increase the liquidity of all its shareholders and to survive within the markets, which are very competitive.

The corporation also helps to have an increase in the market share and limits the liability that all its shareholders may have . The maximize all profits of a company is also a primary objective, generating incomes that are higher than those of the capital that has been invested.

How it is constituted

In order to form a corporation, first a public deed must be made in which all the statutes of the company are established, and this will be done based on the commercial code belonging to the country where it is established. It is made up of three parts, a shareholders ‘meeting which is known in some places as the shareholders’ meeting; the administration of the corporation and finally the supervisory board.

Every corporation must have a minimum number of partners as well as capital stock. All statutes must be well defined. In the joint-stock company, the shareholders’ meeting will be in charge of the entire process of administration and supervision of the company and must hold ordinary and extraordinary meetings to be able to make agreements that are of interest to the company.

Commercial register

The commercial register is a type of instrument of a legal nature that is used to give greater security to commercial traffic and to formalize business . It is a means with which all the costs of a transaction can be reduced and for this reason, it is considered an essential part of the development of the economy .

Its main function is of an administrative nature and is based on the collection and registration of all acts that are related to commercial companies and the people who are part of them. It is also an advertising tool and in it, businessmen must be held accountable . It is in them where the minutes are taken when companies are created or when they are modified for any reason.

Tax regime

The way in which corporations are taxed is known by the name of corporation tax or under the general regime of legal entities , this is of a personal and direct nature. It is taxed from the income that is obtained within the companies. In order to keep track of the tax regime, it is very important to have the services of a professional in charge of the matter as there is a significant burden of tax obligations.


The bodies of a public limited company are the following:

  • Shareholders’ meeting
  • Board of directors

Company administration

The administration or council is a type of body of an executive nature that can be made up of a single or several administrators, whose main function will be to manage and represent the corporation at the time they are related to other companies, clients or public institutions. Also within its functions represent the company in case of damage or harm against persons whether physical or legal , yield reports management and give information to shareholders about important details.

Types of partners

A corporation must be made up of at least two partners and these can be natural or legal , in the latter case, companies.

Members’ obligations

Its main obligation is to provide capital for the company, which is designated from the beginning, otherwise, it could even be seized by the company.

Members’ rights

The partners have the right to enjoy the profits generated by the company, although sometimes it is not entirely proportional to what has been invested. They also have pre-emptive subscription rights which allows you to keep your contribution even if new shares are issued. Lastly, they have the right to convey their membership status or the possibility of attending meetings.

Advantages of a limited company

Among the main advantages we can mention the ease for the partners to transmit the actions , which is done with a simple process. The partners also have limited liability and the administrators do not need to be partners in the company. This type of company has the ability to be listed on the stock market and with this, they have the possibility of obtaining large sums of money for its financing.


Its main disadvantage is the capital that is needed to invest, in addition, its management is quite difficult for many, making a very organized structure necessary.

Regulations by country


They are governed by the Capital Companies Law and by some specific laws that regulate Listed Investment Companies within the real estate market and by the Royal Decree on sports limited companies.


It is regulated by the General Law of Mercantile Companies and because they must mention the capital and be named by their regime, they are known as variable capital stock companies.


It is seen as a capital company that has limited liability and whose capital is represented through its shares. Its shareholders do not have any type of right of the acquired goods although they do have it on the capital.


It is regulated by the Law of Commercial Companies.


In Bolivia they are governed by the General Law of Cooperative Societies, which was approved by Decree-Law of September 13, 1958.


Some examples of public limited companies are:

  • Bricks SA
  • Manzana
  • Atlético de Madrid
  • Sacancio SA

Leave a Reply

Your email address will not be published. Required fields are marked *