Differences between Limited Companies and Public Limited Companies

Limited companies and public limited companies are the most common ways to set up a company.

The Limited Company (SL) or Limited Liability Company (SRL) is a trading company with legal entity status and its capital is divided into equal, cumulative and indivisible shares. Its partners are not personally liable for the debts incurred by the company, being liable only to the extent of the capital contributed. 

The Public Limited Company (SA), on the other hand, is also a trading company with legal entity status, and its capital is divided into shares. However, these shares can have different nominal values and have different privileges linked to them, and can be freely transferred. In addition, the shareholders are not held liable with their personal assets for the company's debts, only up to the amount of capital they have contributed.

In both cases the number of partners required to create the company can be one or more.

Now that the definition for both companies is known, let us look at the differences between the Limited Company and the Public Limited Company:

Initial capital

Both companies require an initial capital contribution in order to be formed which, in the case of the Limited Company is only 3,000 euros, and in the case of the Public Limited Company is 60,000 euros. In the SL the initial capital can be fully subscribed and paid up at the time of its establishment, and this can be in cash, assets or rights, whereas in the SA only 25% of the capital needs to be subscribed and paid up.

Transfer

The transfer of shares in a Limited Company is restricted and must be carried out in accordance with the company's articles of association or, in addition, in accordance with the law, if the articles of association do not regulate the regime for the transfer of shares. The intention to sell them, the number of shares to be sold and their price must be communicated; the other partners will have a preferential right of acquisition. In addition, this transfer must be made in a public document. On the other hand, the transfer of shares in a Public Limited Company is unrestricted, once the company is registered in the Companies Registry, by means of a trade between the parties (normally a purchase and sale) and the delivery of the securities.

Type of business

An SL can carry out practically any type of business, except those reserved by law for public limited companies, such as banking services, pension fund management, insurance, etc. Companies that wish to be listed on the stock exchange must have SA status. Limited Companies are designed for small and medium-sized companies with few partners, family businesses or professional companies that do not require a large capital outlay, whereas SAs are better suited to activities where a larger number of shareholders are required to achieve a higher level of capital and where there is greater mobility of such capital.