Corporate entities

What type of company is typically used in group structures?

In Angola, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

In Australia, the most common type of company used in group structures is the proprietary company limited by shares with a constitution. This guide therefore focuses on the management of proprietary limited companies.

The Australian Securities and Investments Commission (ASIC) administers the company law and regulates the incorporation, operations, management and control of companies and imposes obligations on directors and other corporate officers.

Last modified 8 Feb 2021

In Austria, the most common type of company used in group structures is the limited liability company (Gesellschaft mit beschränkter Haftung or GmbH).  This guide therefore focuses on the management of a GmbH.

Last modified 8 Feb 2021

In Belgium, the two most commonly used company types are:

  • The private limited liability company (besloten vennootschap (BV)/société à responsabilité limitée (SRL)).
  • The public limited liability company (naamloze vennootschap (NV)/’société anonyme (SA)).

This guide therefore focuses on these two types of limited liability companies. Unless stated specifically otherwise, the commentary in this guide applies to both company types.

Last modified 8 Feb 2021

In Botswana, the most common type of company used is a private company limited by shares. This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

Generally speaking, in Chile parties are free to choose their corporate structures, including those for business groups. However, there are some exceptions where certain corporate structures are required by law (i.e. banks and insurance companies).

The most used types of business organizations operating in Chile are:

  • Sociedades de Responsabilidad Limitada (SRL) or limited liability companies or partnerships.
  • Sociedades Anónimas (SA) or stock corporations or corporations. A corporation may be open (public), closed (private) or special.
  • Sociedades por Acciones (SpA) or simplified corporations.

Corporations are mainly governed by Law 18,046 (Corporations Act) and Decree 702 of Ministry of Hacienda, 2011, rules of Corporations Act (Rules). Corporations must be managed by a board of directors appointed by the shareholders. The Corporations Act and its Rules specifically regulate directors, including their appointment, duties, powers and responsibilities.

SRLs and SpAs may be managed by a board of directors if specified by their bylaws, but special regulations for SRLs and SpAs do not include directors' rules. SpAs are regulated in a supplementary manner by the private corporations’ rules, so the Corporations Act and its Rules and the rules about directors may be applicable.

Consequently, the general legal framework for directors is contained in the Corporations Acts and its Rules, and this guide refers to those rules.

Last modified 5 Apr 2021

Similar to most jurisdictions, the Czech form of a private limited company, “společnost s ručením omezeným” in Czech (s.r.o.) is the recommended type of corporate entity in group structures.

Last modified 8 Feb 2021

The type of entities which are typically used in corporate group structures in Denmark are the private limited liability company (in Danish anpartsselskab or ApS) and the public limited company (in Danish aktieselskab or A/S). This guide focuses on directors’ duties in these types of companies.

Last modified 8 Feb 2021

In Finland, the most common type of company used in group structures is the private company limited by shares (Osakeyhtiö in Finnish).  This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

In France, the most common type of company used in group structures is the société par actions simplifiée (SAS), mainly because of its flexibility. Indeed, French law does not set forth a pre-established corporate governance structure for the SAS, but leaves it up to the bylaws to define the applicable governance system. Note however that an SAS cannot make public offerings, except in limited cases.

This guide therefore focuses on the management of an SAS.

Last modified 8 Feb 2021

Typically, a Private Limited Liability Company (Gesellschaft mit beschränkter Haftung – GmbH) is used in group structures. It is by far the most common legal type.

Last modified 8 Feb 2021

In Hong Kong, the most common type of corporate entity used in group structures is the private company limited by shares. This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

The most common (more than 99%) types of company used in group structures are:

  • Limited liability companies (korlátolt felelősségű társaság or kft).
  • Private companies limited by shares (zártkörűen működő részvénytársaság or zrt).

The key difference between these two company forms is that in the case of companies limited by shares, the owners’ equity interest is embodied in shares (printed or electronic share certificates) while in the case of limited liability companies the owners’ interest is only a notional share in the company’s equity (business quota/üzletrész), shares cannot/must not be issued. 

This guide focuses on the management of these two company forms. In general, the directors’ duties are the same in both types of companies.

Last modified 8 Feb 2021

In Ireland, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

In Italy, the most common type of company used in group structures is the private company limited by shares (società a responsabilità limitata - SRL). This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

In Japan there are two primary limited liability companies commonly used by foreign companies under the Companies Act, which are:

  • A joint stock company called a Kabushiki Kaisha (KK).
  • A company that is similar to a US limited liability company called a Godo Kaisha (GK).

No minimum capital is required for the establishment of a KK or a GK, but in both cases registration with the Legal Affairs Bureau is required. 

A key difference between a KK and a GK is the flexibility of corporate governance. The GK structure allows more streamlined corporate governance than under the KK structure (such as a board, auditor etc.). A KK is also required to publish its annual financial statement every fiscal year under the Companies Act.

Although the structure of a GK is used by some companies, a KK is the more common type of corporate structure. Therefore, this guide focuses on the management of a KK.

Last modified 8 Feb 2021

The private company limited by shares is the most common type of corporate entity used in group structures in Kenya.

More recently, however, there has been a significant increase in the use of limited liability partnerships (LLPs).

LLPs are a relatively new business form. They are becoming popular because while like limited liability companies they have separate legal personality and the liability of partners is limited, partners have much greater flexibility in determining the governance structure. They also have pass-through tax with income taxes payable at the level of the partner.

This guide focuses on private limited liability companies.

Last modified 16 Jun 2021

In Luxembourg, the most common type of company used in group structures is the private limited liability company (société à responsabilité limitée). This guide therefore focuses on the management of private limited liability companies.

Last modified 8 Feb 2021

The most commonly used companies are limited liability companies, which may either be a limited liability share company (Sociedade Anónima or S.A.) or a limited liability quota company (Sociedade por Quotas or Lda.). This guide therefore focuses on the management of a limited liability share company and a limited liability quota company.

Last modified 19 Aug 2021

In the Netherlands, the most common types of company used in group structures are public non-listed limited companies (niet-beursgenoteerde naamloze vennootschappen) (NV) and private non-listed companies with limited liability (besloten vennootschappen) (BV).

Last modified 8 Feb 2021

The most common type of company used in a group structure is the private company limited by shares. This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

In Norway, a private limited liability company will normally be the corporate entity of choice in a group structure.

Last modified 16 Jun 2021

The limited liability company (Sociedad Anónima) is the most common type of company used for doing business in Peru. This type of company has the following three subtypes:

  • Closed form (Sociedad Anónima Cerrada – SAC).
  • Ordinary form (Sociedad Anónima - SA).
  • Open form (Sociedad Anónima Abierta – SAA) – mandatory for public companies.

The closed form (Sociedad Anónima Cerrada – SAC) is the most common of the three subtypes, since it grants the choice of having or not having a board of directors.

For all of these subtypes, a minimum of two shareholders is required at all times.

Last modified 26 Jul 2021

In Poland, the most common type of company used in group structures is the limited liability company. This guide therefore focuses on the management of limited liability companies.

Last modified 8 Feb 2021

In Portugal, the most common type of company used in group structures is the limited liability company by shares (sociedades anónimas). This guide therefore focuses on the management of private limited companies by shares.

Last modified 8 Feb 2021

In Romania, the types of corporate vehicles typically used in group structures are limited liability companies (in Romanian societate cu raspundere limitata) (LLCs) and joint-stock companies (in Romanian societate pe actiuni) (JSCs), mainly due to their flexible incorporation procedure and the limitation, in principle, of the shareholders’ liability (in certain situations, their liability may be extended, e.g. by piercing the corporate veil). In practice, LLCs are the most common type of company.

Therefore, this guide focuses on the management of Romanian LLCs and JSCs.

Last modified 8 Feb 2021

In Russia the most common type of companies used in group structures is a limited liability company (LLC). This guide therefore focuses on the management of an LLC.

Last modified 8 Feb 2021

In Singapore, the most common type of company used in group structures is a private company limited by shares. This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

In South Africa, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private companies in South Africa.

Last modified 19 Apr 2021

The most common type of company used in group structures in Spain is the limited liability company (sociedad de responsabilidad limitada or S.L.). This guide therefore focuses on the management of this type of company.

Although there are some differences with other types of companies such as  joint-stock companies (sociedad anónima or S.A.) or public listed companies (sociedad cotizada), please note that, according to the Spanish Companies Act (Ley de Sociedades de Capital), most of the particular provisions applicable to limited liability companies are also applicable to these types of companies.

Last modified 8 Feb 2021

In Sweden, the most common type of company used in group structures is the private company limited by shares. This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

In Tanzania, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

Onshore UAE

In onshore UAE (to be differentiated from a UAE free zone), the most common type of company used in group structures is a limited liability company (LLC). This guide therefore focuses on the management of an onshore LLC.

Dubai International Financial Centre

While there are various company types available in the Dubai International Financial Centre (DIFC), such as holding companies, SPVs or prescribed companies, the most commonly used company is a private company limited by shares. This guide therefore focuses on the management of DIFC private limited companies.

Last modified 8 Feb 2021

In the UK, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 8 Feb 2021

In the United States, entity choice is an important legal determination and choosing the right entity structure depends on a number of factors, including desired management structure and tax treatment.  The most common type of company used in group structures is a corporation, specifically a “C-Corporation”.  This guide therefore focuses on the management of C-Corporations.

Note: Corporate laws differ among the 50 US states.  This guide provides general answers under Delaware corporate law, where approximately two thirds of Fortune 500 US companies are incorporated.

Last modified 8 Feb 2021

The most common type of company in Ukraine is the limited liability company, which is typically used in both foreign and Ukrainian group structures. Therefore, this guide focuses on the management of limited liability companies.

Last modified 8 Feb 2021

In Zimbabwe, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 19 Apr 2021

Angola

Angola

What type of company is typically used in group structures?

In Angola, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

Angola

Angola

What is a "director"?

There is no complete definition of the term "director" in Angolan law.  Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director.

What are the different types of director?

Directors validly appointed as such, through a shareholders' resolution, may be executive or non-executive.

The executive directors are responsible for the management of the affairs of the company.

The non-executive directors are responsible for the general supervision of the performance of executive directors’ duties.

Last modified 1 Mar 2021

Angola

Angola

Who can be a director?

A director must be at least 18 years old.  In the event of a legal person being appointed as a director, it must appoint an individual to exercise the office in their own name. The legal person must share liability with the person appointed by it.

Foreign directors must hold a work visa, ordinary visa or residency card.

Minimum / maximum number of directors

Under Angolan law there is no maximum number of directors. The company’s articles of association may, however, specify a greater minimum number and/or specify a maximum.

The management of private limited companies is carried out by a board of directors, composed of an odd number of members.

It may be agreed in the articles of association that the management shall be exercised by one single director when:

  • The number of shareholders is only two (which can only happen in cases where the State, public companies or entities legally equivalent to the State hold the majority of the share capital).
  • The share capital does not exceed an amount equivalent, in national currency, to USD50,000.00.

Last modified 1 Mar 2021

Angola

Angola

How are directors appointed?

Directors must be appointed by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).

A resolution appointing a director must be filed at the company’s registry office.

Directors must be appointed for the period fixed in company’s bylaws, which must not exceed four calendar years with re-appointment being permitted.

How are directors removed?

Any member of the board of directors may be dismissed (either with cause, or without cause) at any time by means of a resolution approved by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).

A director may also resign at any time through the issuance of a resignation letter addressed to the Chairman of the board of directors, or in case of the resignation of the Chairman, to the company’s audit board or audit committee.

The resignation or the resolution on director’s dismissal must be filed at the commercial registry.

Last modified 1 Mar 2021

Angola

Angola

Typical management structure

Typically, the management of private limited companies is carried out by a board of directors and supervision by a supervisory board, made up of an odd number of members, elected by shareholders at a general meeting.

One of the directors is appointed as Chairman of the board of directors.

How are decisions made by directors?

The manner in which directors can make decisions is set out in the company's bylaws.  In private companies limited by shares, the bylaws typically provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telematic means (provided that the company ensures the authenticity of declarations and the security of communications, registering the content of all interventions) or an unanimous written resolution.

Directors must meet at least once a month, unless otherwise provided in company’s bylaws.

The validity of the resolutions of the board of directors depends on the presence of the majority of its members.

In relation to the minimum quorum, the board of directors must not approve resolutions without the absolute majority of votes of the directors present.

Authority and powers

The board of directors has exclusive and full powers to represent the company.

The powers of representation of the board of directors are performed jointly by the directors.

Acts performed by the directors, on behalf of the company and in the use of the powers conferred upon them by law, shall bind the company before third parties, irrespective of any limitations that may be established by the articles of association or by decisions of shareholders, whether published or not.

Directors shall bind the company if, by affixing their signature, they indicate that intention.

Delegation

Subject to Angolan law restrictions, and unless otherwise provided in the bylaws, the board of directors may delegate powers to one or more directors to deal with certain managing matters. However, the board retains overall responsibility for the company's operations and management.

The board of directors can also appoint attorneys to perform certain acts or categories of acts, without the need for an express contractual clause.

Last modified 1 Mar 2021

Angola

Angola

What are the key general duties of directors?

The key duties of a director are set out in the Angola Companies Law, pursuant to which the director:

  • Must observe a duty of care towards the company, demonstrate capability, technical competence and an understanding of the company's business considered appropriate for the role, and execute its tasks with the diligence of a careful and earnest manager.
  • Must observe a duty of loyalty towards the interests of the company, serving the long term collective interests of the shareholders and taking into consideration the interests of other stakeholders such as employees, clients and creditors by ensuring the sustainability of the company. As a specific realization of this duty, the directors must not pursue or develop, directly or indirectly, other activities in direct competition with the company, unless duly authorized by the general meeting of shareholders.
  • Must carry out any acts deemed necessary or appropriate to achieve the corporate purpose in line with the resolutions adopted by the shareholders, the bylaws and the applicable law.
  • Are responsible for drafting merger and spin-off plans, in addition to other documents required or appropriate for the full legal and economic transparency of the transaction, as well as preparing a report in case of change of the company's legal form (i.e. a change to a different type of company).
  • Are responsible for performing and executing all managing acts not specifically reserved by law or bylaws to the general meeting of shareholders.
  • Are responsible for, following a shareholders resolution (except an unlawful resolution or resolutions that are not compliant with the company's by-laws), taking all necessary measures to execute such resolution, as promptly as possible (namely resolutions making any amendments to the company’s bylaws).

In addition, if agreed by the shareholders and set out in the company’s bylaws, the directors must also decide on and implement:

  • The acquisition, disposal and encumbrance of real estate of the company.
  • The disposal, encumbrance and lease of the business establishment of the company.
  • The subscription or acquisition of other companies' shares or the disposal and/or encumbrance of these shares.
  • The establishment of subsidiaries, agencies, branches or other local forms of representation of the company.

In general, the directors are bound to manage a company in a professional and diligent way, which includes compliance with all legal, statutory and contractual requirements.

What are directors' other key obligations?

The directors are responsible for preparing the annual reports and accounts and other financial statements required by law in respect of each financial year, and must submit them to the general meeting of shareholders and supervisory board, within three months from the end of each financial year, or within five months for companies that submit consolidated accounts or that use the equity method.

The directors are also responsible of preparing and submitting a proposal for the allocation of profits and/or handling of losses to the shareholders, in respect of each financial year.

Transactions with the company

Whenever there is a conflict of interest between the company and a director, the director shall advise the Chairman of the board of directors and abstain from voting on the resolution concerning that conflict.

The company may only grant loans or credit to directors, make payments on their account, guarantee obligations that they have contracted or make advances to them on account of the respective remuneration, up to the limit of the monthly amount thereof.

Contracts signed between the company and its directors, directly or through another person, shall be null and void except if they have been previously authorised by means of a decision of the board of directors, in which the director concerned may not participate, and if they have obtained the favourable opinion of the supervisory board.

Last modified 1 Mar 2021

Angola

Angola

Breach of general duties

Directors are severally liable towards the company for the damages caused to the company as a result of their actions or omissions that are not compliant with their legal statutory or contractual obligations, unless they prove that their actions/omissions were not caused with intentional or negligent misconduct.

The directors may also be subject to criminal liability.

A lawsuit against the directors may be brought by:

  • The company – in this case a shareholder’s resolution to bring the lawsuit must be approved by the majority of the shareholders, and the lawsuit must be sought within six months from the date of such resolution.
  • In the absence of a lawsuit sought by the company, one or more shareholders who jointly own, at least, 10% of the share capital  may bring a liability suit against the directors to claim reparation for damages caused to the company.

A company may seek a range of remedies against a director for breach of duty including damages, recovery of misapplied property, accounting for profit made in breach of duty, an injunction to prevent breach and rescission of a contract.

Liabilities on insolvency

If during the course of its management the company goes bankrupt, the directors may incur in liability if the bankruptcy is declared fraudulent or culpable. The crime of fraudulent or culpable bankruptcy is punishable with a penalty of two to eight years' imprisonment.

Other key risks

Personal liability for directors may, in certain circumstances, arise under Angolan legislation including that relating to environmental and health and safety, employment, consumer protection and bribery/anti-corruption.  In certain cases, criminal liability may arise.

A director may also be disqualified by the court from acting as a director or from taking part in the promotion, formation or management of a company.  A disqualification order can be made for a variety of reasons (e.g. conviction for criminal offences relating to the running of a company, persistent breaches of statutory obligations such as filing documents with the companies register, being found liable for fraudulent or wrongful trading and generally for conduct which makes a director unfit to manage a company).

Last modified 1 Mar 2021

Angola

Angola

How can directors be protected from liability?

The board of directors or the shareholders' general meeting may declare null and void or annul defective resolutions, at the request of any director, shareholder with the right to vote or of the supervisory board, made within one year of becoming aware of the defect that serves as its basis.

The general meeting of shareholders may ratify any resolution or substitute an invalid resolution if it does not concern a matter that falls within the exclusive competence of the board of directors.

Directors shall not execute or allow to be executed resolutions of the board of directors that are null and void.

Directors' and officers' (D&O) insurance is also available. It typically provides both cover for individual directors against claims made against them in their capacity as director, including defence costs (which applies when indemnification by the company is not available), and company reimbursement when it has indemnified its directors (subject to an excess/retention). Policy exclusions typically include claims in respect of a director's fraud, dishonesty, wilful default or criminal behaviour.

What practical steps can directors take to avoid liability?

Directors should:

  • Keep informed about the affairs of the company, particularly its financial position, and compliance obligations. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
  • Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
  • Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
  • Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
  • Act, not only with diligence, but also with loyalty, keeping in mind that they must act always in the interest of the company, taking into account the long-term interests of the shareholders and considering the interests of other subjects relevant to the sustainability of the company, such as its workers, customers and creditors.
  • Also in a group situation, directors should keep in mind that thet must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Last modified 1 Mar 2021