Understanding Business Societies: Types and Responsibilities
Understanding Business Societies
Societies are groups of people gathered by contributions to place them in the production or sale of goods. Initially, these were one-person companies, but as the economy and activities grew, they had to raise more capital to devote to higher production.
The Concept of a Person in Business
A person, in a legal context, refers to all entities that can acquire rights and obligations. The Civil Code defines a person as any entity capable of acquiring rights and obligations.
Types of Societies
- Non-profit: Associations, clubs.
- With-profits:
- Civilians: Do not perform commercial acts (e.g., law firms, medical clinics).
- Commercial: Performs trade acts (e.g., anonymous, SRL).
An association means persons who are non-profit and provide goods to the community.
Civil Society
A civil society is a set of two or more people making contributions to form the assets of the company for non-commercial activities for profit and distributing profits.
Commercial Company
A commercial company is the union of two or more people in an organized way and according to the rates provided in the law, with the input to put them in the production, marketing, and provision of services, sharing the benefits and bearing the losses.
Classification of Societies
Societies are classified into:
- Persons: (collectively, capital and industry en commandite simple, accidental or participation) [joint unlimited liability subsidiary]
- Mixed: (SRL)
- Capital: (anonymous, limited by shares) [limited liability joint subsidiary]
In societies of persons, what matters is the person’s partner. If it has sufficient capital to meet the debts of the society when it can no longer pay because the capital provided by partners is not enough. The most common are limited liability companies and joint ventures.
Responsibility of Partners to Third Parties
The responsibility of the partners towards third parties is:
- Unlimited: The partner responds with the capital provided; if this is not enough, the separate property of the partner will be used.
- Solidary: All partners should assist.
- Subsidiary: The society is primarily responsible for paying social debts; the partner’s goods are only used if the society’s assets are insufficient.
- Limited: The partner responds with the assets transferred to the society without compromising their personal property.
Society in Fact
A society in fact is when people form a society without registering as stated in the Companies Act. It is not within the law but must register legally. The partners register in person at the AFIP and then register the company with data from each of the partners. Partners cannot differentiate their personal assets from the assets of the company. Therefore, members with unlimited liability respond with all their assets for debts contracted on behalf of the society. These societies have a precarious personality, as a partner may apply for retirement or stabilizing society. They do not pay registration fees and do not carry books.
Societies of People
- Partnership: The name of the society includes the partners’ names or a fantasy name with the initials SC. Responsibility: unlimited, joint, and several subsidiary. Co-administration interchangeably. Decisions are made according to most capital.
- En Commandite Simple: The name of the general partner or a fantasy name with the acronym SCS. Responsibility: general partner or limited partnership: limited joint subsidiary. Administration: general partner: together or interchangeably. Decisions are made according to most capital.
- Capital and Industry: The name of sponsors or a fantasy name with the acronym SCI. Responsibility lies with the donors. Industrial partners bring the work and the authorities charged. Administration is of sponsors: joint insistinta. Decisions by a majority of capital.