Limited company, what you should know.

It is very common that at the beginning of a small business, the legal form of limited company. It is more convenient - and what happens in most cases - to constitute a SpA or EIRL. This is due to the ease of these legal forms in developing a basic business. Usually with few partners -or only one- and without a minimum amount of capital, among other flexibilities. You can review more about SpA or EIRL in the following previous posts:http://www.nss.cl/2018/10/29/eirl-empresa-individual-responsabilidad-limitada/http://www.nss.cl/2018/10/02/sociedad-por-acciones/Therefore, it is very important that as an entrepreneur you know what the next level is. If your intention is for your business to grow, to increase the number of partners, the amount of capital, the number of shares, and therefore, the benefits and responsibilities that this entails, you need to consider changing your legal form. That's why, in today's post, we'll explain the essential things you should know about public limited companies. The optimal legal tool for raising large capitals.

What is a limited company?

The law 18,046 on public limited companies it defines it in its first article:”legal entity formed by the meeting of a common fund, supplied by shareholders responsible only for their respective contributions and managed by a board composed of essentially revocable members.”

What are the essential characteristics of an S.A?

From the above definition, it is possible to extract 5 essential elements of an S.A:

1. This is a limited company: The most important thing is the amount of capital provided by the shareholder, not the person himself.
2. Patrimony is the fundamental element of society and forms a legal entity.
3. Shareholder liability is limited to the amount of their contributions.
4. It is always mercantile.
5. The administration is exercised by a body called the board of directors.

The essential thing about a public limited company is its assets and not its shareholders or partners.

How are S.A. classified?

1. Open, Special and Closed Joint-Stock Companies

In general at open joint-stock companies stricter rules apply to it than to closed ones. The reason is that they protect the rights of the public and of the “small investor”. The law establishes requirements to consider a public limited company, since the general rule is closed public limited companies. After the enactment of law 19,705 of the year 2000, open public limited companies are:

• Those with 500 or more shareholders.
• Those that at least 10% of their subscribed capital belongs to a minimum of 10 shareholders, excluding those who individually or through other natural or legal persons exceed that percentage.
• Those that register in the Securities Register voluntarily or in compliance with a legal provision.

Special limited companies are those governed by the special rules established in articles 126 et seq. of the Public Limited Companies Act. It is an exhaustive list of companies that, for reasons of public order, are subject to special regulation. Finally, the closed joint-stock company are those that do not qualify as open or special, or that, being open, cease to be so. In that case, they remain subject to the rules of public limited companies as long as the extraordinary meeting of shareholders does not agree otherwise to two-thirds of the shares entitled to vote.

How is a limited company formed?

You must form your public limited company by means of public writing. Then, an extract must be made within 60 days of the writing that must be registered in the Commercial Registry of the registered office, and published in the Official Gazette.

Content of the Public Deed

1. Name, profession, address and sole tax role or identification document of the shareholders.
2. Name and address of the company. The name must include the words “limited company” or the abbreviation “S.A.”
3. Point out the specific object (s) of society. It can have as its object any lucrative activity that is not contrary to law, morality, public order or State security.
4. Duration of the company. It can be definite or indefinite.
5. The capital of the company and its characteristics. The number of shares into which it is divided must be indicated.
6. Organization and formalities of the administration and oversight of shareholders.
7. Date on which the financial year must be closed and the balance sheet drawn up. Mention should also be made of the time when the ordinary shareholder meeting should be held.
8. The way to distribute profits.
9. How the liquidation should be carried out
10. Nature of the arbitration to which any differences that occur must be submitted.
11. Appointment of the members of the provisional board. In open companies, external auditors must be appointed.
12. The other pacts agreed by the partners. They must be limited by the rules of public order.

]] >