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Definition: Legal form

Business registers

The legal form (also known as legal status) is defined according to national legislation. It is useful for eliminating ambiguity in identification searches and as the possible criterion for selection or stratification for surveys. It is also used for defining the institutional sector. Statistics according to legal form are produced e.g. in business demography. The character of legal or natural person is decisive in fiscal terms, because the tax regime applicable to the unit depends on this. It means that any statistical register fed with fiscal records will have that information. Experience has shown that legal form will often be useful to make adjustments to information collection processes and questionnaires on the legal unit operating an enterprise. A code representing the legal form should therefore be recorded in accordance with the classification of legal forms or categories.

The following legal forms can be found in most countries:

- Sole proprietorship: Enterprise owned exclusively by one natural person.

- Partnership: Association of persons who conduct a business under a collective name. It can take the form of a limited partnership.

- Limited liability companies: Enterprises comprising joint-stock companies, limited partnerships with share capital and private limited company. .

- Co-operative societies: These are bodies set down by law in each country. They observe a number of general principles, for example they may only be entitled to provide their services to members, profits are often distributed in proportion to members' dealings with the society, etc.

- Non-profit making bodies.

- Enterprises with other forms of legal constitution: This group includes nationalised industries, publicly-owned enterprises and state or local authority monopolies.
Eurostat, "Business registers. Recommendations manual", Methodologies and Working Papers, Publications Office of the European Union, Luxembourg, 2010