Legal entity - the main business entity. Its essential and defining features developed back in Soviet legal science, enshrined in practice and preserved in the civil law of almost all states in the post-Soviet space.
It is not necessary to identify the enterprise and the legal entity: the former is only a variation of the latter. Sometimes, by default, a legal entity is considered created for profit, while a number of public organizations and state institutions, being legal entities, have very different goals that are far from making profit.
Signs of a legal entity: briefly on the main
In order to correctly identify a legal entity, one should understand the distinctive features of this legal institution. The features of a legal entity include:
- organizational unity;
- legal capacity and legal capacity;
- the presence of separate property and the ability to bear property responsibility;
- ability to act in court as plaintiff, defendant and third party.
Below we consider these signs in more detail.
Organizational unity
A legal entity is, first of all, an organization that has a certain organizational structure, as well as sole or collective management bodies that exercise the legal capacity of a legal entity.
The right to determine the organizational structure of a legal entity is enshrined in constituent documents and, as a rule, refers to the exclusive competence of a legal entity. Management bodies are also determined by the constituent document of the enterprise. This can be either a sole management body represented by a director or a collegial one, for example, a board headed by a chairman. The order of appointment of management bodies, their type, powers largely depend on the legal form, goals and scope of the created business entity.
The organizational structure is the basis for a number of important documents:
- staffing table;
- functional responsibilities;
- the order of interaction of structural units;
- payroll calculation.
If the legal entity is in state or municipal ownership, then constituent documents the procedure and conditions for coordination of the organizational structure with a higher authority are introduced, as well as the procedure for the appointment, approval of the composition and control over the activities of the governing bodies of such an entity.
Segregated property
Some theorists have expressed the view that the presence of separate property does not apply to the characteristics of a legal entity. This is hardly the case.
A legal entity is an independent subject of commodity-money relations. Participating in the economic turnover, it gets the opportunity to independently acquire property rights and fulfill obligations, as well as be responsible for the obligations undertaken. All this is ensured by the availability of separate property of a legal entity.
Property is not necessarily a material object. It may include property rights, bank deposits, rights to securities and other types of contributions.
Property, as a rule, is transferred to the organization by its founders for conducting business activities, however, from the moment of state registration, the transferred assets become the property of a newly created entity - a legal entity.That is why the property is called detached.
Its isolation is guaranteed by the division of responsibility of the legal entity and its founders: the former is not responsible for the obligations of the latter, and vice versa.
Legal capacity
These categories mean the ability of a legal entity to have civil rights and obligations, as well as through their actions to create, implement and fulfill them.
The legal capacity of a legal entity arises from the moment of its state registration - from the date of making the corresponding entry in the register in the manner prescribed by law.
Legal capacity, as a rule, arises simultaneously with legal capacity. An exception is the situation when the statutory activity of an enterprise is subject to licensing (patenting) or other licensing procedure carried out by authorized state bodies. In this case legal capacity comes from the moment of the official issuance of the permit.
A legal entity shall exercise its legal capacity through the governing bodies created by it and in the manner provided for by the constituent documents. The ability to acquire property rights and obligations on its own behalf consists in the ability of a legal entity to conclude agreements, contracts and agreements, including labor ones, to act as a party to obligations and bear responsibility for their implementation. Legal capacity also includes the right of third parties to bring claims, suits, and foreclose on the property belonging to it to the organization.
The right to be a party in court
To protect its interests before counterparties and other participants in the business turnover, a legal entity receives the right to appear in court as a plaintiff, defendant or third party. Moreover, the organization acts on its own behalf, and not on behalf of the founders.
By participating in a lawsuit, the governing body of a legal entity has the right to appoint a representative acting by proxy. The power of attorney is issued by governing bodies having such powers in accordance with the constituent documents of the organization.
What does not apply to the characteristics of a legal entity?
It is important to correctly identify the essential features of a legal entity as a business entity that help distinguish it from related concepts, as different legal procedures and consequences are provided for different categories.
There are a number of symptoms that are erroneously attributed to a legal entity. Such signs may be characteristic of other legal institutions and are not determining for the organization. Below we consider some of them.
Authority
Often, the competence of the governing bodies of an organization is identified with authority, but these concepts are not identical. The governing bodies of a legal entity perform the functions provided for by the constituent documents, and only within their own competence to regulate the economic activity of a managed entity.
The power inherent in state authorities that regulate a certain area of public relations in the ways provided by law:
- the publication of regulatory legal acts;
- issuance of permits;
- suspension of economic activity of individual entities.
The difference lies in the fact that the authority of state bodies extends to an indefinite number of business entities of the state. The powers of the organization’s management bodies extend only to the business activities of a particular legal entity and are characterized as management functions. As you can see, the presence of power does not apply to the characteristics of a legal entity.
Separate units
The defining features of a legal entity mistakenly include the presence of separate subdivisions: branches, representative offices and other structural units with special rights.
It should be clarified that the creation of such units is a right, not legal obligation persons prescribed by law. So, the organization can allocate part of its property and on its basis create a separate structural subdivision with extended business rights, for example, the right to independently conclude contracts on behalf of a legal entity, the right to accept and dismiss employees of the unit.
At the same time, a separate division does not become a separate business entity and exercises only those powers that are defined for it by a legal entity and are fixed in a power of attorney and position.
As you can see, the presence of separate divisions does not apply to the characteristics of a legal entity: the duties and use of the rights of the parent organization are carried out by the branches partially and within the limits provided for by the constituent documents.
Receiving a profit
Profit is one of the indicators of economic activity, is reflected in the balance sheet and is an object for calculating taxes. That is why profit is often mistakenly considered a mandatory feature of a legal entity.
At the same time, organizations can be created for different purposes. These goals are fixed in the constituent documents and are reflected in the further economic activities of such an entity. Goals can be either commercial or non-commercial. Depending on this, a legal entity may be profitable or unprofitable.
Thus, making a profit is an indicator of the economic activity of commercial organizations and does not apply to the mandatory features of all legal entities.
Legal address
State registration of the created organization is carried out in the manner prescribed by law, and requires the mandatory indication of its legal address.
The law provides that the location of a legal entity is the address indicated in its constituent documents. The charter or other constituent document of the organization necessarily contains a legal address: as a rule, this is the location of the governing body.
At the same time, the organization is sometimes located at the actual address in its own or leased premises or fixes a separate address for receiving mail correspondence. As a result, an organization may have several official addresses assigned to it on certain legitimate grounds.
It is clear from the foregoing that the legal address is a mandatory requisite of constituent documents and a condition for state registration, but does not apply to the essential features of a legal entity.
Stamp availability
The mere presence of a seal on a document does not confirm the authority of the signatory. Its competence is checked on the basis of constituent documents or a duly certified power of attorney issued by the governing body of the legal entity.
The legislation may provide for compulsory certification of the signature of a member of the governing body or representative with the organization’s seal, or it may not oblige the legal entity to receive the seal at all, so the seal is not a mandatory feature of the legal entity.
These are the general characteristics of a legal entity as the main subject of economic turnover and a participant in commodity-money relations.
