When comparing a limited company vs SPV, the key difference is purpose: a limited company runs an ongoing business, while an SPV is created for a specific, ring-fenced project.
While both are legal entities with limited liability, they serve very different purposes and are used in distinct contexts.
In this article, you’ll learn:
- What do you mean by limited company?
- What are the two types of limited company?
- What is the specific purpose of SPV?
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La información contenida en este artículo es meramente orientativa. No constituye asesoramiento financiero, jurídico o fiscal, ni una recomendación o solicitud de inversión. Algunos hechos pueden haber cambiado desde el momento de su redacción.
What Is the Meaning of Limited Company?
A limited company is a legal business structure where the company operates as a separate entity from its owners or shareholders.
This separation provides limited liability; meaning shareholders are only liable for the company’s debts up to the amount they invested.
Key features of a limited company
- Limited liability: Protects personal assets from business risks or debts.
- Trading flexibility: Can operate across various sectors and carry out multiple types of business.
- Regulatory requirements: Must comply with corporate tax rules, maintain financial records, and file annual reports and returns with the relevant authorities.
What are the types of limited company?
There are two main types of limited companies:
- Private Limited Company (Ltd): Shares are privately held and not traded on public markets.
- Public Limited Company (PLC): Shares can be offered to the public and traded on a stock exchange.
Limited companies are commonly used by:
- Active businesses or startups
- Professional service providers
- Small and medium-sized enterprises (SMEs) looking to grow and access formal business protections
This structure offers operational flexibility while maintaining legal and financial separation between owners and the company.
What Does SPV Mean in Business?
In business, a Special Purpose Vehicle is a limited company established for a specific, narrowly defined financial or legal objective.
Unlike regular limited companies that can operate across multiple sectors, an SPV is designed to serve one distinct purpose.
Common uses of SPVs include:
- Holding a single asset, such as inmobiliario or intellectual property
- Facilitating a specific investment deal or joint venture
- Conducting securitization transactions in structured finance
- Isolating high-risk assets or liabilities from a parent company
SPVs are especially useful for:
- Risk isolation: Containing legal or financial exposure within a standalone entity
- Ownership clarity: Streamlining stakeholder participation and simplifying profit-sharing
- Project-specific structuring: Ensuring that the entity only engages in one transaction or asset holding
Because SPVs are designed for precision and legal clarity, they are not used for general trading, broad commercial activity, or running multiple lines of business.
Their narrow focus is what makes them such powerful tools in investment, finance, and real estate structuring.
What Is the Difference Between SPV and Limited Company?
In essence, an SPV is a single-purpose tool for focused investment or asset management, while a limited company is a broader operational structure suited for long-term business activity.
| Category | SPV | Limited Company |
| Purpose | Formed for a single, defined objective such as holding a property or executing a one-off investment | Broad business scope; can operate across multiple sectors and projects |
| Ownership & Funding | Typically has a small, fixed group of investors; ownership often static | More flexible ownership; can issue shares, raise capital, and scale operations |
| Risk & Liability | Designed to ring-fence risk; liabilities are contained within the SPV | Offers limited liability, but risk is spread across wider business activities |
| Regulation & Tax | May qualify for special tax treatment or reduced disclosure in some jurisdictions | Follows standard accounting, tax, and corporate compliance rules |
| Common Use Cases | – Real estate acquisition – Joint ventures – Asset-backed deals – Investment syndications | – General trading or service businesses – Startups, SMEs, and consultancies |
| Strategic Fit | Ideal for single-purpose transactions requiring asset isolation | Best for ongoing business operations and multi-project enterprises |
Which Is Better: SPV or Limited Company?
- A special purpose vehicle is better if your priority is to ring-fence risk, manage a single-asset project, or collaborate on a joint investment. It’s particularly effective for real estate deals or focused transactions requiring asset isolation and investor clarity.
- Opt for a limited company if you’re building a trading business, expanding into multiple ventures, or operating long-term across sectors. It offers more flexibility for reinvestment, staffing, and general growth.
Other considerations include:
- Tax and compliance: Some jurisdictions offer SPV-specific tax benefits, while limited companies may qualify for broader trading-related deductions.
- Legal environment: Regulatory treatment varies, and some countries simplify SPV registration or restrict their use for certain activities.
Ultimately, the best structure aligns with the deal’s complexity, your operational needs, and how much control or transparency you require.
Conclusión
An SPV and a limited company serve different strategic functions; not one-size-fits-all solutions.
Rather than focusing on which is better, consider which structure complements the scope and timeline of your project.
Whether you need a focused vehicle for a single investment or a flexible platform for broader business operations, aligning your structure with your long-term intent and jurisdictional rules, will give you a clearer legal and financial footing from the start.
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Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.
