We explain what a public limited company is, how it is classified and its elements. Also, what are its general characteristics and advantages.
What is a corporation?
A public limited company, abbreviated as SA, is a commercial company whose holders (shareholders) participate in the share capital through titles or shares.
Those actions They can be distinguished from each other by their nominal value or by the privileges linked to them, thus establishing various hierarchies among the holders.
One of the important features of a Public Limited Company is that the shareholders They are not responsible for their debts through their respective personal assets.but up to the maximum amount of the contributed capital.
Usually the creation of these companies is regulated by commercial law.
See also: Cooperative
History of the Public Limited Company
The direct antecedent of the Public Limited Companies are Trading Companies.
They were European companies that They settled in the different colonial territories from America, Africa and Asia in the 18th century.
They made it possible to finance the high cost of each trip by transporting raw materials to the metropolis.
These were semi-public entities in which The monarchs associated themselves with the bourgeoisie and small capitalistsunder a profit sharing figure.
Later, in the 19th century, these types of initiatives passed entirely into private hands in almost all European countries.
The role model was the English Company Act (1862) and the French Commercial Code (1807)founding the basic postulates of a Public Limited Company.
Types of corporations
Public limited companies can be of two types:
- Open capital (SAA). They are those that aspire to numerous shareholders, who enjoy greater commercial freedoms with respect to their securities, which go to the stock market.
- Closed capital (SAC). Limited to a certain number of shareholders, it does not register its shares in the Public Registry of the Stock Market, nor does it allow the free transfer of shares.
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Elements that make up a Public Limited Company
A corporation is usually composed of:
- A General Meeting of Shareholders. Also called General Assembly of Partners, in which those in charge of the administration of the company are elected, based on the participation of its shareholders, in person or through authorized legal representatives. It is the highest ranking institution in the company.
- A manager of the company. Someone who will exercise the executive and representative functions of the company, and who will be elected by the General Meeting of Shareholders. It may be an individual or sole administrator, several joint administrators, a Board of Directors (also called Board of Directors) or a Socioeconomic Administrator.
- A supervisory board. A figure that does not exist in all countries, but is responsible for supervising the work of the administrators and keeping the company’s affairs under internal control.
Differences with a Limited Company
These two types of capitalist society are distinguished by:
- SLs require little initial capital and are usually appropriate for companies with few partners. The SA, on the other hand, is better suited to large companies, in which the capital of all the partners can be agglomerated.
- The transfer of shares in a limited liability company must be notified to the board of shareholders, who will have full exclusivity of preferential purchase, and the seller must also inform who the new holder will be and provide all the information requested. In a SA, on the other hand, commercial transactions are free and only respond to the commercial code of the law.
- In a SL the liability of the partners is joint and several among themselves, while in the SA it is limited to the capital invested.
Requirements to create a Public Limited Company
To found a Public Limited Company, some requirements established in the commercial laws of each country must generally be met.
The usual thing is to require:
- A minimum number of partners or shareholders, all subscribing to at least one share each.
- A minimum established share capital or subscription of shares.
- A constituent document of the corporation that responds to the regulations of the law.
Legal personality
A Limited Company constitutes a legal entity, therefore will respond as such before the courts or tribunals competent in any eventuality.
International denominations
Depending on the country in question, public limited companies may be called that way, or They may be known as a Public Limited Company, Public Limited Corporationor in Anglo-Saxon countries as Public Limited Company (PLC).
In other countries reference is made to its internal way of distributing titlesas in Italy: Societa per azioni or “stock company”. All these terms refer to the same thing.
Taxation
Public limited companies pay taxes, of course, and They usually do this through special laws or tax codes.such as the Spanish Corporate Tax (25% since 2016), for example.
According to the tax laws of each country, Public Limited Companies will pay more or less taxes than other entities.
Advantages of a public limited company
Some advantages of forming a corporation are:
- Freedom. Partners can freely market their shares and the Company can list them on the stock exchange.
- Protection. Since the partners have limited liability, their personal assets are protected.
- Flexibility. It can be formed with a variable number of partners, and in some countries it can even be with just one partner (Single-Member Limited Company).
Disadvantages of a Limited Company
On the contrary, the disadvantages of this type of association are:
- Minimum capital. To form a Limited Company, a minimum amount of available and proven capital is usually required, as stipulated by law.
- Strict operation. It is much stricter in its actions and more rigid than other forms of commercial society, since it is much more supervised by the State.
- High tax rate. It is also common for Public Limited Companies to be charged with high taxes, but this is not a rule.
References:
- “Anonymous company” in Wikipedia.
- “Public limited company” in Debitoor, Accounting Glossary.
- “Anonymous company” in CreacionEmpresas of Santa Cruz de Tenerife.
- “What is the difference between a public limited company and a limited liability company?” at BBVA Spain.
- “SA (Anonymous company)” in Expansión (economic dictionary).
- “Characteristics of the public limited company” in Crear-Empresas.
- “Characteristics of public limited companies” in EmprendePyme.