Know the difference between SA and SL
Are you going to create a company? Do you already know which legal form suits you best? Do you know the difference between SA and SL?
We all know that the two most commonly used options are the Limited Liability Company (SL) and the Public Limited Company (SA), so let's distinguish between SA and SL so that you can choose which is the most suitable for you and your project.
Difference between SL and SA
The distinction between both occurs in different aspects that are related to their administration and economic management.
Share Capital and the social shares and shares in an SL compared to an SA
Next, we are going to learn about the differences between a public limited company and a private limited company in relation to share capital.
What is the minimum share capital that an SL and an SA must have?
The minimum share capital that partners must contribute when creating the company must be:
- In the SA: 60,000 euros
- In the SL: currently the minimum share capital for the incorporation of a Limited Company has been reduced to 1€ thanks to Law 18/22.
In an SL, the minimum share capital at incorporation is reduced to the amount mentioned above; however, for liability purposes towards creditors, the capital remains set at 3,000 euros.
If you wish to know more information about Law 18/2022, which has brought changes to the capital of limited companies, you can consult the following article:
SA vs SL: What initial outlay must be made in the creation of the company?
If you choose the option to create a Ltd company, the initial share capital can be less than 3000 euros. In public limited companies, there is also the possibility of making a partial payment. The shareholders must subscribe all the share capital, but they may pay, at the incorporation of the new company, 25% of the subscribed capital, with the remainder to be paid later.
What happens, however, with non-cash contributions? That is, can contributions be made in goods, machinery or materials?
Indeed, the shareholders can make contributions both in cash and non-cash contributions to increase the share capital. Thus, in Ltd companies, shareholders making these non-cash contributions must value the assets contributed, whereas in public limited companies it will be a report from independent experts appointed by a commercial registrar who determines the value of the contributions, constituting another difference between public limited companies and Ltd companies.
What happens if I want to transfer the shares that correspond to me in the business?
If in the future you are not interested in continuing to participate in the business, you should bear in mind that there are also differences between SA and SL regarding the purchase and sale of shares and participations, so take note that:
In SLs, you should know that you cannot freely transfer the participations, unless it is to another partner, spouse, ascendants or descendants, or to companies within the group that has been formed and that you must formalise a deed before a notary to record it.
In SAs, the shares can be represented by certificates or book entries and stand out for being freely transferable, that is, the shareholder owner can sell their participation to whoever they want.
Differences between SA and SL according to the governing body and the statutes
In the case of SLs, the directors can serve for an indefinite period unless the company's articles of association state otherwise, whereas in SAs there is always a term specified by the articles of association, which cannot exceed 6 years.
Indeed, companies can amend the articles of association. In the case of public limited companies (SA), a report justifying the reason and the benefits that such amendment may generate is required.
Partners have the right to participate in Shareholders' Meetings votes, but also, in this case, differences arise between SA and SL. Thus, in SL all partners have the right to attend, whether they have few or many shares, whereas SAs require a minimum number of these shares.
Thus, SLs do not have a minimum attendance quorum, whereas in SAs, at the first call made, those shareholders present must hold 25% of the subscribed capital.
There are also differences between SA and SL in this regard. In the case of SLs, majorities must be reached to validate agreements. This majority will correspond to the valid votes representing at least one third of the shares into which the share capital is divided.
In the case of SAs, an ordinary majority must be obtained to reach corporate agreements. This ordinary majority consists of a simple majority of the votes of those present at the meeting.
There are also differences between SA and SL in obtaining reinforced legal majorities and reinforced statutory majorities.
Which is better, SA or SL?
After having seen the difference between SA and SL, there are certain aspects you should take into account before deciding to set up one or the other.
Firstly, the Limited Company is significantly more common than the Public Limited Company. The reason for this is the need to contribute a lower share capital. Consequently, it can be a much more economical option if the partners do not have a high purchasing power.
Regarding its legal complexity, this is much more pronounced when setting up a Limited Company and that is why we recommend our Notaries in Barcelona to expedite your company formation process. This is a recommended way to overcome the legal complications that may arise along the way.
As you have been able to see, there are significant differences between SA and SL. The key is to choose the legal form that best suits your needs. The business activity in our country is booming, and it is always a good time to start a business. Therefore, at JLA Notarios we specialise in Commercial and company services with the aim of offering the best assistance.
We will be happy to answer any questions you may have at our notary office in Barcelona, via our email bcn@jlanotarios.com or through the contact form on our website.
