What is a legal entity?

A legal entity is an organization that hasin property, economic management or operational management of property, is responsible for its obligations with this property, and can also acquire and exercise property and personal non-property rights, perform duties, act in court as a defendant or plaintiff.

Agree, this term sounds prettyand, of course, it is very difficult to understand his unprepared person. However, this term is fixed by law. However, there is a simpler and clearer answer to the question of what a legal entity is, and it sounds like this: "A legal entity is an organization that satisfies a number of legally prescribed signs." So much easier! It remains only to deal with these very signs.

Signs of a legal entity

So, a legal entity is an organization that must correspond to a number of characteristics. What are they?

  • Restriction of functions. It implies the presence of statutory and constituent documents, as well as the passage of the procedure for state registration.
  • Control over activities. It is carried out at the expense of assigning to the legal person of the official address, conducting bookkeeping, as well as other forms of reporting to authorized organizations.

Many organizations have a legal andactual address. The first one is used for correspondence with authorized organizations and development of relations with business partners, the second - for communication with the target audience.

A typical example: household appliances stores, most of which have an office where management and managers of various categories (lawyers, accountants, advertising) are based, and directly the shops in which the goods are sold. In this case, the first address becomes usually legal, the second - the actual one.

  • Organizational unity. Defines a legal entity as a single entity with its own management bodies, councils, audit commissions, etc.
  • Property isolation. This feature determines the obligation of the legal entity to keep a record of costs and revenues.
  • Speech before the judiciary andcivil liability - these two signs mean that a legal entity can be held accountable for its expenses and offenses on its own behalf (name of organization).

For more information on legal entities, see the article "Signs of a legal entity."

Classification of legal entities

Legal entities are classified according to a number of characteristics:

  • form of ownership (public or private);
  • objectives of activities (commercial or non-commercial);
  • composition of founders;
  • rights of participants (determines the rights of participants to the property of the organization).

Types of legal entities

"Species division" of organizations revolves aroundobjectives of their activities. Any legal entity can be attributed to either a commercial group or a non-profit. That is, the purpose of the organization's existence is its defining characteristic.

What is a commercial organization? This is a legal entity that conducts commercial activity, and divides profits (and this is the main goal of a commercial organization) between founders and participants. Limited liability companies, joint-stock companies are typical examples of commercial organizations.

A non-profit organization can also receiveincome, but profit is not the main goal of its existence. A non-profit organization pursues different goals. Charitable foundations, public organizations are the most famous examples of non-profit organizations.

As we wrote above, each legal entitythere must be a statutory charter, and in this very statute for non-profit organizations, the purposes for which their profits may be spent are fixed. This is necessary, first of all, so that the founders of organizations declared as charity do not spend the funds of sponsors and patrons for their personal purposes. Of course, they can do this, but this practice is pursued by law.

Branches and representative offices

Legal entities have the right to create their owntheir own branches and representative offices, and they may not be registered as independent legal entities. The scope of activities of representations is, as a rule, the protection of the interests of a legal entity, while branches may perform functions of a different nature delegated to them by legal entities.

Usually, branches and representative offices appear atlarge organizations that wish to expand the geography of activities. Branches and representative offices can be opened both within the limits of one city, and in other cities and even countries.

Read also:

  • Is the IP a legal entity
  • What is a firm

More information you can find in the section Forms of entrepreneurship.

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