There are many types of commercial companies. The collective society is one of them. When choosing between this or another type of company, it is necessary to know what type of advantages and disadvantages it entails. In the following article we show you what a Collective Society is in depth.

Steps to follow:

1. The collective society is a traditional mercantile society in which the partners intervene in the management and respond personally and in an unlimited and joint manner on all the social debts that said society contracts.

2. It is a company that acts and responds to third parties as a person other than its partners. This carries out commercial or civil activities under a unified company name, thus responding the partners on the debt that cannot be covered with the company’s capital stock.

3. The main advantage of this type of company is that a minimum capital is not necessary for its constitution. In addition, the maximum membership limit is also removed.

4. Bearing in mind that the partners are liable in an unlimited and joint manner for the debts of the same, it is easier to get loans for the company, since these would be guaranteed by all the general partners.

5. Another advantage is that the entry of people outside the company is controlled, since no partner can transfer their participation to a stranger without prior consultation with the rest of the partners.

6. The main drawback is that all partners have unlimited liability for debts.

7. In addition, the partners who are part of this company cannot appear as unlimited liability partners in any other company. Nor can it undertake on its own or on the behalf of another person businesses that are analogous or that represent a competition for society.

8. These drawbacks make it a very little used legal form.

9. The constitution of this company must be formalized through a public deed that will be registered in the Mercantile Registry. At this time, it will acquire its legal personality.

10. The deed must include the name, surname and address of all the partners, the business name, the name and surname of the partners who manage the company and their social use, the capital that each partner contributes (cash, credit or effect), the duration of the company, the amount assigned to each manager for their private expenses and the other legal agreements that the partners believe appropriate to leave in writing.

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