Legal Entity

Abbreviated as LE by ABBREVIATIONFINDER.ORG, legal entity is an entity formed by individuals and recognized by the State as having rights and duties. The term can refer to companies, governments, organizations or any group created for a specific purpose.

Even though it is formed by one or more individuals, who are responsible for the created entity, the juridical person, in English, has an independent and differentiated legal personality in relation to each of its members.

This means that the legal entity is represented as its own entity before Justice and the State, to which it is responsible for its acts. That is, in principle, the legal entity and the individuals that compose it are not confused.

Although there is this clear differentiation between the entity and its officials, for Justice, members of a legal entity can also be individually held responsible for acts of the entity they represent.

This happens, for example, when it is proven that a crime committed by a company was due to the decision of one of its managers. In this case, both the company and the manager can answer separately before the courts.

Types of legal entities

According to the Civil Code, there is more than one classification of legal entity. They differ in the way they are constituted and in the laws to which they respond.

Legal entity under domestic public law

Generally created by law, they are those that legally represent the Union, states and municipalities, in addition to autarchies and all other bodies that were the public administration.

Legal entity of external public law

These are foreign states and international organizations, such as the United Nations (UN) and the International Monetary Fund (IMF). Legal entities governed by external public law are accountable for the rules of international law, which are recognized by Brazilian domestic law.

Legal entity of private law

It is the one formed by the initiative of its members – unlike the individual, who acquires this status from his birth, and the legal person of public law, which is created by law.

The legal entity of private law needs to be formally registered with the competent bodies to come into existence before the law. The most common records are the National Register of Legal Entities (CNPJ) and municipal and state registrations.

The legal act that represents the administrative procedure for the creation of a legal entity is called a constitution.

Private legal entities can be both private and state owned. What differentiates is the origin of the resources used in its constitution.

State-owned companies are legal entities that have the participation of public authorities, such as mixed-capital companies and public companies. The other category, on the other hand, includes entities constituted with private resources only.

Under Brazilian law, there are six types of legal entities governed by private law:

  • Associations
  • Companies
  • Foundations
  • Religious organizations
  • Political parties
  • Individual limited liability companies

What is the difference between an individual and a company?

The difference between the natural person and the legal person is that, while the term natural person refers to a concrete individual, a human being, the legal person represents an abstract subject, such as companies, associations, public administrations, etc.

Legal Entity

What is an individual?

Individual is every human being as an individual, from birth to death. This designation is a legal concept and refers specifically to the individual as a subject with rights and duties.

The term natural person is commonly used in law and legislation. An example in which the term appears is the Individual Taxpayer Register (CPF), which is the registration of citizens for tax purposes, made by the Federal Revenue Service.

To be considered an individual, however, it is not necessary to have a CPF. For the law, the human being is an individual since he was born alive, since from then on he already has rights and duties. The birth certificate is, therefore, the first registration of the individual.

Can an individual issue an invoice?

In general, the issuing of invoices is more associated with legal entities, since these entities represent the majority of subjects registered for commercial activities.

However, there are some cases in which individuals can also issue invoices without having to open a company and obtain a CNPJ.

This category fits the professional autonomous service providers, for example, a gardener and architect without bond employment with their customers.

In order to issue an invoice, individuals must have a registration in their municipality as a service provider. The registration and activity rules that may fall into this category may vary depending on the place of residence or service provision.

For this reason, self-employed people need to contact their local government for more information on how to issue invoices to receive for services rendered.