What is the legal entity?

legal person

Of course, the name of legal entity is widely listened to by a good part of the citizens, although they really know what its meaning is. To correct this linguistic incidence, it will be necessary to state that it basically refers to a fictitious person capable of exercise rights and acquire the obligations to carry out activities that cause full legal responsibility. It has a special relevance to develop a wide range of contracts in which this very particular figure is required and that can be understood even better with a series of examples.

One of the aspects that must be stressed from the beginning is that it does not have to coincide with the figure of the natural person. Because in fact, in some cases it will be the same, but in others it is not this way. Among other reasons because the concept of person is much broader by allowing actions that have to do, both with companies as with people. Its breadth, therefore, is one of its common denominators and the meaning to which this term is directed that you have heard so many times in your life.

On the other hand, you need to know that the role that is granted to a certain social or professional group is greater so that it can participate in a process of legal system. With the fundamental objective of fulfilling the purposes pursued by all its members. Not surprisingly, there is a risk of confusing this very relevant term with that of an individual person when in reality it is not in this way, as has been explained in this brief introduction.

Legal person: differences


You have to know above other considerations there are some very substantial differences with respect to other of the most common terms in this class of topics, such as the natural person. Well, the latter will be personally responsible for the debts and obligations that a company can assume at some point or another. While on the contrary, in the legal person this incidence is limited to the assets of the company. Another of its differences is that the natural person is made up of a single person.

Another important sign to recognize this very special figure is based on your own recognition. That is, it applies so that a person or entity (of any kind) has rights and obligations at the same time. This is very important for the legal proceedings that they may go through. Or even for the start-up of a company or professional project. Not surprisingly, it determines future actions in various areas of the administrative process. To the extent that they can be valid for the granting of financing or aid of any kind and condition.

Links with other figures

Nothing better than highlighting other comparisons to get to the true meaning of the word that we are dealing with in this article. In this sense, one of the most relevant keys to detect what the legal figure is materializes with something as simple as that they can be sjoint stock companies, limited companies, indistinctly. In both cases legal persons are present. Although on certain occasions you should know that this figure is hidden under company names. In order to avoid liability in the event that someone makes a claim to them, and although it is a legal process, it is necessary to clarify that it is not a highly recommended practice from an ethical point of view. Beyond other considerations that will be the subject of other more specific analyzes.

Do you want to know some of the examples that represent a legal person? Well, you may have the odd surprise because they will be included so well known to everyone, such as Inditex, El Corte Inglés or Leroy Merlin. In other words, they can even be the owners of companies that are listed on the equity markets. Because in fact, in many cases it can represent companies that exercise a Comercial activity. As in the case of those that we have explained in this article. So that in this way you already have a little clearer what is the real impact of this term that can be a little more complex for its correct understanding.

Advantages of this legal form


In any case, the legal person involves a series of contributions if you are integrated into this figure. You may already know some of them, but others may surprise you and even benefit you from them. Among which are the ones that we expose you below:

  • You are in a position to have a greater capital because it can be contributed by the other partners. This is a very effective strategy to boost business, companies or any professional project.
  • In all cases you will have a better access to credit lines that commercialize the banking entities. In preference to other types of clients, including individuals. But with an added value such as that they will be formalized with better contracting conditions so that in this way you save a few euros in the accounting operation.
  • Another of his most relevant contributions lies in the fact that a legal person is in a position to access public tenders without major restrictions. With a certain preference in relation to other figures and that can help you to achieve your objectives with respect to these approaches.
  • With respect to the previous section there is another derivation that can be very interesting to defend your personal interests and even from a professional point of view. It is the fact derived from carrying a series of social benefits and safe and that they could not otherwise get. Even to be receptive to a very specific line of grants launched from official bodies.
  • And finally, it cannot be forgotten at any time that legal entities have limited liability. This in practice means that they significantly restrict their responsibility for the obligations or debts that the company may incur. To the point that this fact can be very advantageous to them at some point in their lives.

Disadvantages of legal persons

But not all are benefits with this special figure, but some inconveniences are generated that you should keep in mind if you are in some of these situations. In this sense, it is not surprising that you get the odd surprise with certain approaches. Like the ones that we are going to show you below.

  • There is no doubt that its biggest drawback is that it requires a greater investment for its constitution. That is, it will involve a greater financial effort than you will have to make to become a legal entity if this is really your desire.
  • Moreover, the administrative effort it will be much greater. Not surprisingly, you will have no choice but to submit a greater number of accounting documents. This can be told by people who have gone through this situation since bureaucratic procedures will increase above normal.
  • El control of society it is more diffuse than in the rest because the administration can fall on several people. They are considered as partners and there will be more debates to make a decision or carry out any economic or legal management. This is a difference that sets many people back in their desire to establish themselves as a legal entity.
  • Undoubtedly, another of his most negative contributions is based on the fact that this figure presents a greater difficulty to be closed or sold. It is not as simple a process as can occur through other kinds of figures.
  • If what you really want is to expand or reduce equity Of course, more problems await you since the restrictions are higher. To the point that you can see yourself immersed in incidents from an accounting point of view.
  • Finally, you must bear in mind that the legal person is not always the best possible scenario to establish a company. On the contrary, there are other formats that will be more useful for the defense of your personal interests. You just have to inquire about them in case you are interested in adopting a constitution formula.

Governing bodies


Another very important aspect is that which has to do with its regulation. In this sense, the existence of natural persons is very necessary to decide the destination of the goods you have. You cannot forget that the bodies are regulated by law and also by the statutes presented by legal persons. Among which the following stand out due to their special relevance:

  1. El administrator it is the most common of all.
  2. A more complex figure as it is in the specific case of the so-called solidarity administrators.
  3. El board of directors It is one of the terms with which you will be more familiar since it is used with special frequency by legal persons.
  4. And as a last resort, other governing bodies such as the shareholders or the board of partners, among some of the most important and at the same time common. There is no doubt that they will be the ones that will sound the most to you right now.

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