Setting up a company: joint stock or limited liability?

One of the most common questions when setting up a company is whether to form a joint stock company or a limited liability company. Both are capital companies, and the shareholders' liability is essentially limited to the capital they contribute, but there are important differences in how they operate.

• Number of shareholders: A limited liability company may have between one and fifty shareholders; a joint stock company has no upper limit.
• Share transfers: In a limited liability company, shares are transferred before a notary and require general assembly approval. Shares in a joint stock company are more freely transferable, although restrictions may be set in the articles of association.
• Management: A joint stock company is managed by a board of directors; a limited liability company by its managers.
• Capital and formation costs: The minimum capital requirements differ and may change; check the current amounts before incorporation.

The right choice depends on the number of shareholders, the investment plan, the need for share transfers and growth objectives. Preparing the articles of association with a lawyer before incorporation reduces the risk of disputes later on.