Differences Between Legal Entities and Natural Persons

 

One of the most frequently encountered concepts in the field of law is the legal entity. Questions such as “What does legal mean?” or “What is a legal entity?” are commonly asked. To fully understand this concept, it is first necessary to clearly distinguish it from a natural person.

 

 

What Is a Legal Entity?

 

A legal entity refers to organizations that are established within the framework of the law for a specific purpose and that possess an independent legal personality. Associations, foundations, companies, and similar organizations are considered legal entities. These structures have a legal existence separate from natural persons.

The main difference between a natural person and a legal entity is that a legal entity is not an individual but represents an organization and has a separate legal identity. However, behind every legal entity, there are natural persons who establish or manage it.

 

 

 

What Is a Natural Person?

 

The concept of a natural person refers directly to human beings. An individual acquires the status of a natural person at birth and gains rights and obligations within the legal system.

Natural persons can:

• Enter into contracts,
• Own property,
• Incur debts,
• File lawsuits or be sued in their own name.

The liability of natural persons is personal, and they are individually responsible for the legal consequences of their actions.

 

 

Who Is a Legal Entity?

 

A legal entity is a legal organization that exists independently of individuals. Companies, associations, foundations, and cooperatives fall under this category.

Legal entities can:

• Acquire rights and obligations in their own name,
• File lawsuits or be sued,
• Carry out legal transactions only through authorized representatives.

 

 

Key Differences Between Legal Entities and Natural Persons

 

Legal Status:
A natural person represents an individual, whereas a legal entity represents an organization. Legal entities are independent legal subjects recognized by law.

Representation:
Natural persons represent themselves. Legal entities act through managers or authorized representatives.

Liability:
Natural persons are personally liable for their debts and obligations. In legal entities, liability generally belongs to the organization itself.

Establishment:
A natural person gains legal capacity at birth. A legal entity is established through legal procedures for a specific purpose.

Legal Transactions:
Natural persons conduct transactions personally, while legal entities carry out transactions through their representatives.

 

What Is a Public Legal Entity?

 

A public legal entity refers to legal bodies that are established to provide public services and operate within the structure of the state. These entities are established by law and serve the public interest.

 

 

Types of Public Legal Entities

 

• Public Institutions: Municipalities, universities, public hospitals
• State-Owned Enterprises: Commercial enterprises owned by the state
• Public Benefit Organizations: Certain foundations and associations

 

How Is a Public Legal Entity Established?

 

A public legal entity can only be established by law or with authority granted by law. Its establishment process and powers are fully determined by legislation.

 

 

Private Law Legal Entities

 

Private law legal entities are organizations established for commercial or social purposes without a mandatory public-interest objective. They do not have a direct administrative connection with the state.

 

Examples of Private Law Legal Entities

 

• Companies
• Associations
• Foundations
• Cooperatives

These entities may incur debts, file lawsuits, and engage in commercial activities in their own name.

 

 

Are Companies Legal Entities?

 

Yes, all commercial companies are legal entities. Capital companies such as joint-stock companies and limited liability companies have independent legal personality.

Sole Proprietorships and Limited Liability Companies

• Sole proprietorships do not have legal personality; they operate through the natural person.
• Limited liability companies and joint-stock companies are legal entities and exist independently of their shareholders.