Limited company (represented by the acronym Ltd..) consists of a type of business society which is characterized by the participation of the partners through investments made in proportion to the shares of the company's share capital.
Also known as limited liability company, the limited company is the most common type of company used in Brazil.
A limited partnership is established when two or more people come together to create a business society, which is based on a social contract which serves to specify all aspects related to the company's rules and share capital, which is divided into quotas.
In this type of company, the liability of the partners is limited only to the shares they have in the company, that is, the participation they have through their contribution. Thus, their respective salaries, for example, will be proportional to the total value of the shares they own.
However, in some cases, even though the responsibility is restricted to each share, all partners must answer for the full share capital. For example, a company with share capital of BRL 50,000 - formed by partner A, who has shares totaling BRL 45,000, and by partner B with shares of BRL 5,000 - in case of debt, all partners must answer for the total amount of BRL 50,000.
The company's shares (a set of assets that can be assessed) may be equally divided among the partners or in different percentages, proportional to the contribution and participation of each one.
Learn more about meaning of ltd.
Unlike the corporations (S.A) which are based on shares, the limited has the advantage of preserve the partners' personal assets in case of bankruptcy or closure of the company
Learn more about the meaning of anonymous society.
In Brazilian law, the specifications and characteristics of the limited liability company are described in the chapter IV of the Civil Code (art. 1,052 to art. 1.087). However, with Law No. 12,441 of July 11, 2011, limited liability companies are also opened in companies with only one partner, separating the rights and duties of individuals and legal entities, in this context.
Characteristics of limited company
Limited partnerships must be based on some basic rules to be formalized:
- A partner must be responsible for the part of the share capital (quota) that he has committed to invest;
- Share capital is divided into shares (equal or unequal), and each partner can have one or more. He or she must contribute to your quota through money or goods, but not through services rendered;
- A partner is excluded from the company in two situations: when he does not pay the amount referring to his account for the payment of share capital or when he puts the existence of the company (the business) at risk;
- Partners must not withdraw the company's profits, if they symbolize losses to the company's share capital. The main objective is to ensure the stability of the business in general;
- The constitution of a fiscal council is a recommended measure, but not mandatory.
See also the meanings of EIRELI and company.
