Skip to content

Joint Stock Company: Definition, characteristics and advantages 

you can read this

What is a stock company?

It is a type of company that allows the shareholders to regulate voluntarily and to a certain extent, aspects that concern the company as such. Only one shareholder can participate in the process, which acquires the legal power and is in a position to seal commercial contracts that are made both with other legal entities and with natural persons.

In other words, the joint-stock company is a type of capital company, since its nature is purely commercial. Usually, the majority of the companies are constituted as Simplified Joint Stock Companies or S.A.S, since they can be consolidated from a private document, only in the case that their constitution involves assets subject to public deed, where this type of document is required.

Know all information about partnerships

Characteristics of a company by shares

It is important to bear in mind that when faced with social obligations, the partner becomes the very debtor of the company being formed. These are the main characteristics of this type of company:

Liability of a company with a joint-stock company: the partner in this type of company has limited liability towards the company being incorporated, which exempts him from responding to debts or obligations taken on by the company.

Share capital: the capital within the company by shares can appear both in shares and in securities. Contributions may be made either in the form of physical money or in kind, a process that involves an expert assessment to determine its value. The capital will be divided into transferable shares that can be attributed to an owner or partner.

Partners: it can be constituted with only one person. However, it may have a team or network of partners who do not participate in the management of the company, since their activities are limited to the position of general partners, although they may be participants in the profits obtained by the company. Only the owner or partners outside the general partners can make decisions and get involved in the aspects of the partnership.

Duration of the company: if there is an estimate of the company, this must be expressed in the incorporation document, which may establish that it is for a defined period, although it may also be for an indefinite period.

Requirements: it is extremely important that the private document of incorporation is authenticated, which must be passed by all the people involved in the process. It is not a public deed as such, but a signature recognition that must be taken before a notary. This document must include aspects such as the name, address and document of the shareholders, the company name with the letters S.A.S, the address of the company, the duration, the share capital, among others.

In addition, a description of the main activities to be carried out as a company, whether a commercial or civil activity, must be included. Although it is not mandatory, it is important to provide this information for purposes of legality and possible future complications.

What is a stock company

Steps to create a corporation by shares

Registration: the first thing you must do is check with the Single Business and Social Registry, there you can verify that there is no other company registered with the same business name that you want to register there. Likewise, you must have a series of documents for the constitution of the company that include forms, documents of the legal representative, among others.

The procedure must be carried out to obtain the definitive Commercial Registry, which you will get with the necessary documentation established within the Chamber of Commerce or the corresponding entity according to your location.

Bank account: it is necessary to create a bank account in the name of the company. There, the bank will provide a certification that validates the existence of the account and also the share capital for the start of the company’s activities.

Articles of Association: the company can be terminated due to the impossibility of carrying out the activities that were foreseen in the corporate purpose of the company, as well as due to causes established in the articles of association, judicial liquidation proceedings, losses that damage the company’s assets with a high percentage or consensual termination.

Public deed: this document must include the name of the company, which must mention the type of company on which it is constituted with the abbreviation SpA. There, the objective on which the company is consolidated and which requires a commercial purpose is established. The number of representatives and their identification must be stated, as well as the actions that each person will carry out for the company.

Finally, for the application of the resolution of invoicing, it will be necessary that the procedures are diligently carried out

dictated by the entity. We recommend that you request a digital signature for your company.

Advantages of a joint-stock company

This type of company can be incorporated by a single person, one of the most important characteristics of the company by shares, since in most companies at least two persons are required to incorporate the company. However, the fact that the first owner is a single person does not mean that more people cannot join, as this can be done in the course of the company.

Another important point is that the share capital of this company can be paid in instalments, spread over a maximum of 5 years. This provision must be included in the articles of association of the company. Likewise, the shareholders have the possibility to sell or assign their shares in the company.

Keep in mind that the regulations, percentages and some of the conditions of the company by shares can vary according to the place of location, so it is extremely important that before starting with the process of incorporation of your company, consult with an expert to guide you in the process.