The Limited Company (SL) is a type of commercial company that is mainly characterized because partners limit their liability to the contributed capital.

Its capital is divided into equal, cumulative and indivisible participations, which cannot be incorporated into negotiable securities nor called shares.

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Characteristics:

The characteristics of Limited Companies are as follows:

• Number of partners: Minimum one partner and no limit of partners. If the partner is unique, a single-member limited company (SLU) is created. They can be natural or legal persons.
• Class of partners: Working partners and/or capitalist partners.
• Name or Corporate Name: It must be original and not previously registered in the Commercial Registry, followed by the abbreviation S.R.L. or S.L.
• Liability of partners: It is joint among them and limited to the contributed capital. Partners do not respond to debts with their personal assets.
• Share capital: the legal minimum is €3,000 with no maximum limit. It can consist of economic contributions or in kind (computers, vehicles, real estate,….) valued and accepted by all partners.
• Registered Office: Address where the company is located.
• Division of share capital: Into social participations. Their transfer has legal limitations and other partners have a right of preference over third parties.
• Constitution: It is carried out through public deed and bylaws signed before a notary and subsequently submitted to the Commercial Registry. In the deed it will be necessary to detail the contributions made by each partner and their corresponding percentage of share capital.
• Corporate Purpose: activities to which the company will be dedicated.
• Management responsibility: It belongs to the administrators, not the partners.
• Administration and management body: There are several options: Sole administrator, Joint administrators (each one can act on their own and this commits everyone), Joint and several administrators (they must act jointly, always signing, which limits and slows down the power of representation) or Board of Directors (three or more administrators). The bylaws will establish the duration of the position (normally it is made indefinite) and, if it exists, the remuneration.
• Tax obligations: The S.L. is obligated to pay Corporate Tax and VAT.
• General Meeting of partners: Maximum decision-making body. It is convened by the administrators in the first 6 months of the year to present the management carried out, approve the annual accounts and the distribution of results. Modifications to the bylaws and appointments and dismissals of administrators are also discussed. They can be convened ordinarily or extraordinarily and if a partner representing 5% of the share capital requests it.

After the entry into force of the Entrepreneur Support Law (29-09-2013), a Limited Company can be established without the initial capital of 3000 euros. Although a series of obligations must be met to protect third parties. These are the Limited Companies of Successive Formation.

We hope this information is very useful to you.