DEGREE IN BUSINESS ADMINISTRATION AND MANAGEMENT
CHAPTER 2.
CORPORATION CHARACTERISTICS
Summary:
1. Characteristics of a corporation
2. Capital principles
3. Spanish rules and principles
María José García López
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urjc corporate acconting, Apuntes de Administración de Empresas
Asignatura: Corporate Accounting, Profesor: Desconocido Desconocido, Carrera: Business Administration and Management, Universidad: URJC
Tipo: Apuntes
2016/2017
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DEGREE IN BUSINESS ADMINISTRATION AND MANAGEMENT
CHAPTER 2.
CORPORATION CHARACTERISTICS
Summary:
1. Characteristics of a corporation
2. Capital principles
3. Spanish rules and principles
María José García López [email protected]
1. CHARACTERISTICS OF A CORPORATION
The characteristics of corporations are derived directly from the definition contained in article 1 (section 3) of the TRLSC1 'the Stock in the corporation will be divided into shares, will be integrated by the contributions of members who shall not be held personally liable for company debt '. In turn, these characteristics will be related to historical reasons that led to the emergence of such corporations.
- COMPANIES BY SHARES. The evolution of the economy and business growth required increasing amounts of capital to undertake certain ventures and partnerships could not collect the funds because they had few investors. Therefore, the total Capital was divided into small holdings or stakes, which were placed among a large number of partners. Thus, with small contributions from many owners big funds were gathered. The total capital stock is divided into shares which are aliquots of the capital.
- CAPITALIST CORPORATION. By increasing the number of partners the trust relationship is lost between them. In capitalist corporations who are not interested on who the partner is, their importance is limited to their contribution to capital (a greater contribution of the partner, the greater their participation in the rights of the company) and hence the name of capitalist corporations. Therefore, since it does not matter who the partners are, the companies are pursuing the objective of facilitating the transfer of ownership, so that a partner can easily leave the company if he/her/it decides so, be replaced by another. It facilitates the acquisition and loss of membership condition without the other partners’ agreement (as opposed to partnerships where it is essential to maintain the existing relationship of trust). This is also achieved through the shares, since they are easily transferable securities, securities that can be bought and sold on the secondary market.
- LIMITED LIABILITY COMPANY. Finally, companies are increasingly undertaking more risk, therefore, with the creation of the corporation is also intended to limit the liability of the partners to make it interesting to participate in it. If the company is having trouble settling their debts with the property business, the partner will never responds with their own social wealth, which is a limitation on the investment risk. It makes the investment more attractive.
- ORDERING CAPITAL PRINCIPLES. Due to the limited liability of the partners, the Capital Stock has a vital importance for the legal system as it is the maximum commitment regarding the payment of debts to creditors. This implies that TRLSC treats at all times to defend and protect the amount of Capital and achieve it is always fully realized in real assets that secured creditors recovering their claims.
governing it, which of course is the mercantile legislation (Code of Commerce, regulations of the Mercantile Registry, etc.).
MINIMUM CAPITAL: Social capital may not be less than EUR 60.000€ and it has to be expressed precisely in this currency. Therefore, to incorporate a business is required to provide property and rights with a real value of at least a quarter of the previous amount (25% minimum outlay of capital stock). The outstanding amount (75%) is a Corporation’s right of recovery against the shareholders.
NATIONALITY: All corporate enterprises with registered offices on Spanish soil, irrespective of the place of formation, shall be Spanish and subject to the Spanish legislation. Corporate enterprises whose main business establishment or operation is on Spanish soil shall have a registered office in Spain. This is important because it defines which law of which country will be applied or used.
REGISTERED OFFICE: Corporate enterprises shall establish their registered office at the place on Spanish soil where their actual administrative and management activities, or their main business establishment or operation, are located. In the event of discrepancies between the registered office entered in the Mercantile Registry and the office as defined in the previous article, third parties may consider either to be the valid address.