Collective society

economic-dictionary

A collective partnership is a type of commercial partnership in which several partners come together under a collective name and in solidarity for the development of an economic activity.

The type of collective society bases its concept on the union of several partners for the development of a certain project or the realization of an economic activity.

All participating partners value a common commitment to participate in the commercial company created. Their corresponding rights and duties will be established according to the contributions of each one of them.

As a result of these agreed obligations, the joint and supportive distribution of the results of the company arises. In case of losses, the partners must face them with their own assets.

For these reasons, it is common that there are equal unions of a few partners with great professional harmony and with low social capital.

This facilitates economic decision-making and management, favoring an equitable and supportive distribution of profits and responsibilities.

Main features of a collective society

There are a number of distinctive characteristics of this type of commercial company:

  • Commercial activity: The constitution of the company seeks to carry out a certain economic activity.
  • Personalistic nature: The performance of said activity is carried out under the same unified company name.
  • Number of partners: This alternative requires a minimum of two partners to make its constitution possible.
  • Responsibility: It is established as joint and several and unlimited, where the partners respond to possible debts in a subsidiary, unlimited and joint manner. Herein lies the main difference with other types of commercial companies, such as limited companies.
  • Social capital: This modality does not require a minimum contribution of social capital in the creation of the company.
  • Company name: This company requires a collective name that encompasses all partners, or that of one of them, accompanied by the termination and CIA. It must also include S.C. or S.R.C of collective society.
  • Communication and formal constitution: The collective society must be registered in the Mercantile Registry, making both its company name and its collective name public and legal.

Members of a collective society

The partners belonging to this type of commercial union can have both physical and legal personality for their participation.

Furthermore, these are divided into two distinct sets:

  • Industrial partner: Including worker partners, who contribute labor to the objectives of the company. Although they generally do not participate in the management and administration of it (and therefore have no responsibility for potential losses), they do have the right to profit.
  • Capitalist partner: Contributing both goods or capital and work, these partners are in charge of managing the company. They participate in the profits according to the proportion of their participation, although they must also support the losses in that sense.

This corporate modality is regulated in the different legal systems and laws of each country, as is the case with the rest of the commercial company models.

In the Spanish case, for example, the Commercial Code is the institution that defines it and defines its characteristics. In tax matters, these companies are taxed through company tax.

Examples of collective society in reality

The collective partnership, or regular partnership, is not a form of majority partnership, since there are other more widespread forms such as the cooperative partnership or the already mentioned limited liability companies.

That said, there are various representations in the economic day-to-day of communities. Examples of this are small joint ventures or the union of certain professionals.

In this way, many law firms or law firms or architectural firms or insurance brokerages choose to create collective partnerships.

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