SA or SL company in Andorra: key differences and how to choose the right structure

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🏛️ Capital companies in Andorra: what you need to know

In Andorra, the corporate law governing capital companies only provides for two forms of commercial entities: the Public Limited Company (SA) and the Limited Liability Company (SL).

The theory is simple, but the practice is very different. Minimum capital, flexibility, decision-making, and the ease of bringing in investors all strongly influence which type of company best suits each project.

What follows is not an abstract explanation of company law, but a technical and practical reading based on how Andorran businesses actually operate.

⚙️ SA vs SL: structure, capital and how they operate

Below are some of the most relevant aspects that differentiate the two types of companies.

Before that, it is important to remember that share capital is the amount contributed by the partners so that it becomes part of the company’s own resources. In Andorra, the minimum thresholds are:

🧱 Minimum share capital

• SA: €60,000, fully paid up
• SL: €3,000

The SA requires greater initial resources and conveys a more robust corporate image, but this “superiority” does not necessarily mean it is the best option for most businesses.

🏗️ Corporate governance and decision-making

There are also differences in how each type of company is managed:

• SA: designed for multiple shareholders, entry of investors, different classes of shares and a more formalised corporate governance structure.
• SL: a simpler structure, with directors who often coincide with the shareholders and more direct decision-making.

If a project aims to expand capital or incorporate different profiles over time, the SA offers greater flexibility. If the business is small, stable and has few partners, the SL is naturally more comfortable.

🔄 The most significant difference: transfer of shares or quotas

In both cases, everything is formalised before a notary and registered in the shareholders’ or partners’ ledger. But legally and strategically, the nature of capital is radically different.

🟦 SA: open capital and fluid transferability

A Public Limited Company is intended to facilitate the transfer of shares, making the procedure less rigid. In practice, this can be summarised as follows:

• Share transfer is free by default.
• There is no mandatory pre-emptive right.
• A shareholder may enter or leave without affecting the life of the company.
• It is ideal for investors seeking flexibility and for companies that want to grow without personal dependency.
• It does not require approval from other shareholders unless restrictions have been previously established.

The SA is, essentially, a structure designed for shareholders to change.

🟪 SL: closed capital, controlled and based on trust

Unlike the SA, the SL is intuitu personae: the identity of the partner matters.

In Andorran practice, when forming this type of company, it is almost always established that there will be:

• pre-emptive rights,
• rights of withdrawal,
• consent from existing partners for any transfer,
• limitations on the entry of third parties.

The SL protects internal cohesion, prevents surprises and gives current partners control over who becomes part of the project. It is a type of company that, to some extent, blends the idea of investor and manager.

🎯 What does this mean in practical terms?

In simplified terms:

• If you want to open the door to new investors easily, the SA is the natural form.
• If you want to control who enters and who leaves, the SL is clearly the best option.

🧩 Other differences that matter in everyday operations

🛡️ Limited liability

In both cases, partners are only liable up to the amount of capital they have contributed. This limitation, however, depends on proper regulatory and accounting compliance, not on the company type.

Therefore, you should not assume that a company without the term “limited” in its name has broader liability than the capital initially contributed.

🧾 Articles of association and shareholders’ agreement

The articles of association govern the company’s internal functioning. Some particularities are:

• In an SL, a shareholders’ agreement is almost essential to regulate coexistence, rights and exit mechanisms.
• In an SA, the articles are generally sufficient because the structure is already designed for more impersonal capital movements.

➤ Shareholders’ agreement: what it is for and when it is essential
➤ Articles of association of an Andorran company

🏦 When is an SA recommended?

In Andorra, an SA does not necessarily mean “a large company”, but rather a structure prepared to grow and receive capital.

It is common in:

• projects with planned entry of investors,
• medium-to-large-sized holding structures,
• companies operating with international third parties that want to project solidity,
• sectors where the law requires an SA: banking, finance, insurance or regulated services.

The SA makes more sense when the project has an institutional weight and capital may change hands.

❗ When we do not recommend it

For SMEs, professionals or micro-companies, its cost and complexity rarely provide real benefit.

🧑‍💼 When is an SL recommended?

The SL is the most widely used form in Andorra and, in practice, the one that best fits:

• small and medium-sized businesses,
• family companies,
• professionals who provide services,
• projects with few partners and internal trust,
• local activities or simple structures.

The SL makes it easier to start, is cheaper to maintain and gives partners control without complicating operations.

📌 The Andorran reality: what actually happens

Given the size and reality of the country, the SL is clearly the dominant type.

🔍 More than 95% of companies incorporated are SLs

This is no coincidence: most business projects in Andorra align better with internal control and stability than with open-investment structures of large scale. Moreover, the size of the country and the needs of local companies make the SA almost marginal.

🔍 The usual criterion is not capital, but the future

Andorra does not typically have large financial projects, which often makes the SL the most coherent choice.

• If the project may involve investment rounds, new partners or frequent transfers, an SA is usually recommended.
• If it is a small, stable business run by the same people who own it, the SL is generally chosen.

🏛️ Incorporation process

Preliminary step

Before starting the procedure, it is important to know whether the partners are residents of the Principality or not. If they are not, the obligations imposed by the foreign investment law must be taken into account, and the corresponding authorisation must be obtained. You can consult the article Foreign investment authorisation in Andorra: when it is required and how it is processed if you want to have all the relevant information.

Incorporation

In essence, the procedure for incorporating both types of companies is almost identical in both cases. There are internal differences, especially regarding the articles of association, political rights and applicable limitations.

If you want to understand the incorporation process in detail, you can consult the specialised article Incorporating a company in Andorra: steps, requirements and advantages.

🔔 Post-incorporation obligations

Once the company has been incorporated, its accounting obligations begin, meaning it is required to keep proper accounts, prepare balance sheets and profit-and-loss statements, and file its annual accounts.

If you want to understand in depth how Accounting in Andorra: origin and structure of the General Accounting Plan (PGC) — you can consult our article.

Likewise, it is also important to mention that tax obligations arise at this stage. If you are curious to learn which taxes apply to an Andorran company, you can consult the article Corporate income tax in Andorra: rates, special regimes and deductions.

Finally, don’t forget to check the article Holding companies in Andorra: taxation and main advantages, one of the most in-demand corporate structures.

🧠 Conclusion: the legal form is a strategic decision

The difference between an SA and an SL is not only technical: it is a decision about how you want your project to evolve.

• If you prioritise control and simplicity → an SL is generally the preferred option.
• If you prioritise flexibility and investor entry → an SA usually provides greater flexibility, though not as much as in other jurisdictions.

Both forms are valid. What matters is the structure your project will need five or ten years from now.

🤝 Need help choosing the right structure?

If you want to analyse which type of company best fits your project, you can contact us through our contact form.

You can also book a meeting from the footer if you prefer specialised one-to-one guidance. We will be pleased to be of help.

Last updated: November 2025