Compiled February 1998
by Foreign Tax Law, Inc.
PO Box 2189
Ormond Beach, Florida 32175-2189 USA
tel. (904) 253-5785
fax (904) 257-3003
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DISCLAIMER: Though every effort has been made to present the legal texts and information accurately, due to the nature and scope of the material, we cannot be liable for errors, omissions or other problems in the texts. The material offered herein is not a substitute for competent legal assistance by a licensed attorney of the jurisdiction in question.
(Law of August 4, 1934; August 31, 1934; February 12, 1949; December 31, 1956. Amended by Decree of January 23, 1981. Further amended by Decree of December 22, 1982, published in Diario Oficial of December 30, 1982, effective January 1, 1983. Further amended by Tax Reform Law, 1990, effective as from January 1, 1990 and by Decree of June 11, 1992. Last amended by Decree of December 18, 1996, published December 24, 1996)
GENERAL LAW OF MERCANTILE COMPANIES
CHAPTER I. ORGANIZATION AND OPERATION OF COMPANIES IN GENERAL
CHAPTER II. GENERAL PARTNERSHIPS
CHAPTER III. SPECIAL PARTNERSHIPS
CHAPTER IV. LIMITED LIABILITY COMPANIES
CHAPTER V. JOINT STOCK COMPANIES
PART I. CONSTITUTION OF THE COMPANY
PART II. SHARES
PART III. ADMINISTRATION OF THE COMPANY
PART IV. VIGILANCE OVER THE COMPANY
PART V. THE FINANCIAL REPORTS
PART VI. MEETING OF STOCKHOLDERS
CHAPTER VI. SPECIAL PARTNERSHIP WITH SHARES
CHAPTER VII. COOPERATIVE SOCIETIES
CHAPTER VIII. COMPANIES HAVING VARIABLE CAPITAL
CHAPTER IX. MERGER, TRANSFORMATION AND SPIN-OFF OF COMPANIES
CHAPTER X. DISSOLUTION OF COMPANIES
CHAPTER XI. WINDING-UP OR LIQUIDATION OF COMPANIES
CHAPTER XII. FOREIGN COMPANIES
CHAPTER XIII. PROFITSHARING ASSOCIATION
CHAPTER XIV. REGISTER OF MERCANTILE COMPANIES
TRANSITORY ARTICLES
TRANSITORY PROVISIONS OF DECREE OF DECEMBER 22, 1982
COMMENT: The General Law of Mercantile Companies describes how to organize Mexical subsidiaries. A United States company may also do business in Mexico by using two other methods:
1. Direct registration of an existing U.S. Business organization. One method of doing business is by direct registration of a U.S. or a foreign corporation. Foreign companies can only engage in commerce after they are registered in the Public Register of Commerce. A firm may obtain registration in the Public Register of Commerce to conduct business in Mexico as a branch operation. To obtain authorization from the Ministry of Economy to enable the firm to register, the following procedure must be followed:
The company must first prove that it was organized in conformity with U.S. Law, by presenting a copy of its corporation charter and by- laws and all other authenticated documents concerning its formation. It also must present a certificate from the nearest Mexican Consular or diplomatic official to the effect that the company has been lawfully organized according to U.S. Law. Authentication and certification are accomplished by obtaining certified copies from the proper officials under U.S. Jurisdiction where the company's documents are registered. If the document to be authenticated has not been registered in a government office, then the company's secretary must prepare copies whose signature is verified by a notary public. The notary public must state his jurisdiction and also state that he examined the company's records and that he knows the executing (secretary) to hold his respective office, and he has the power to certify for the company. An appropriate State Official must then authenticate the signature of the notary. All the authenticated documents must be presented to the Mexican Consul in the district. The consul will authenticate the signature of the State Official of the U.S. and issue a certificate that the company has been constituted in accordance with the laws of the State.
It should be noted here that doing business by direct registration in Mexico will open the door for possible liability of the company's U.S. assets to foreign judgment which may be rendered against the company because of its Mexican operations. Also to be considered is the difficulty that may be encountered in setting off parts of the profits and loss to the Mexican phase of the operation for tax purposes.
2. Registration of a U.S. Subsidiary. Another method of doing business in Mexico is to register a U.S. Subsidiary of a U.S. parent company directly, to engage in business in Mexico. This method, of course, is used mainly to take advantage of tax reductions accorded to Western Hemisphere trade corporations.
(See section 921 of the U.S. Internal Revenue Code.)
CHAPTER I. ORGANIZATION AND OPERATION OF COMPANIES
IN GENERAL
ARTICLE 1.
This Law recognizes the following kinds of mercantile companies:
1. General Partnerships.
2. Special Partnerships (Partnerships en commandite).
3. Limited Liability Companies.
4. Joint Stock Companies (corporations).
5. Special partnerships with shares. (Partnerships en commandite with shares.)
6. Cooperative associations.
Any of the companies referred to in sections 1 to 5 of this article may be organized with variable capital, in which case the provisions of Chapter VIII of this Law must be observed.
ARTICLE 2.
Mercantile companies when recorded in the Public Registry of Commerce shall
acquire ("Personalidad") legal entity independent from that of their
constituent associates.
Except in the case provided for in the following article, the companies recorded in the Public Registry of Commerce can never be declared null and void.
Companies not recorded in the Public Registry of Commerce but formed before third parties shall be legal entities, whether their articles of association consist of a public instrument or not.
The internal relations of irregular companies (unregistered or faulty charter) shall be governed by the provisions of this charter or, in default thereof, by the general and special provisions of this Law, depending on the particular class of company.
The person who, as representatives or attorneys of an irregular company, effect juridical acts, shall be liable toward third parties for the fulfillment of same in a subsidiary, sole and unlimited manner, without prejudice to the criminal liability they might incur if such acts cause harm to said third parties.
Any partners or stockholders not guilty of the irregularity may exact damages from the offenders and from the individuals who act as representatives or attorneys of the irregular company.
ARTICLE 3.
Companies which have an illicit object or which customarily perform illicit
acts shall be null, and shall be liquidated immediately upon request which may
be made at any time by any person, including the Public Prosecutor.
The liquidation will consist only of the disposal of the assets of the company to meet its debts, any surplus being applied to extinguish any civil liabilities incurred. Should there by no such civil liability, then the surplus shall be turned over to the Public Charities Fund at the place of domicile of the company.
ARTICLE 4.
Any company which is incorporated under any one of the classes authorized in
Article 1 of this Law shall be considered a mercantile company.
ARTICLE 5.
(Amended by Decree of June 11, 1992) Companies shall be incorporated before
a Notary, and modifications to their articles of association shall be made in
like manner. The notary shall not authorize the articles when the statutes or
their amendments contravene the provisions of this Law.
ARTICLE 6.
The articles of association of a company must state the following:
1. Name, nationality and domicile of the persons or corporations ("artificial persons") who are its founders.
2. Object of the company.
3. Name of the company.
4. Duration of the company.
5. Amount of its capital.
6. The contribution to capital of each of the associates, in cash or property; value given to such contributions and method followed for their appraisal. Should capital be variable, this should be so stated, as well as the minimum capital agreed upon.
7. Domicile of the company.
8. Procedure for administration and powers enjoyed by the administrators.
9. Appointment of administrators, and designation of the persons who shall sign for the company.
10. Method of dividing profits and losses among the associates.
11. Amount of the reserve fund.
12. Causes for premature dissolution of the company; and
13. Procedure for the winding- up of a company, and method for the appointment of liquidators whenever the latter have not been previously appointed.
All the requisites referred to in this article and such other rules as may be set forth in the articles of association with regard to its organization and operation shall constitute the by- laws of the company.
ARTICLE 7.
Should the articles of association not have been drawn up before a Notary, and
provided they comply with the requisites laid down in sections 1 to 7 of Article
6, any one of the associates may institute summary proceedings to demand the
execution of the respective notarial deed.
Should the articles of association not be presented for inscription, in the Public Registry of Commerce within fifteen days from the date of their execution, any one of the associates may institute summary proceedings to demand said registration.
Persons who transact business in the name of the company prior to the registration of the articles of association shall incur joint and unlimited liability for such transactions with regard to third parties.
ARTICLE 8.
The corresponding provisions of this Law shall be applicable in the event of
omission of the requisites specified in sections 8 to 13, inclusive, of Article
6.
ARTICLE 8 A.
(Added by Tax Reform Law, 1990, effective as from January 1, 1990) The business
fiscal year of mercantile companies shall coincide with the calendar year, unless
the companies were legally formed after January 1 of the corresponding year,
in which case the first fiscal year shall begin on the date of its formation
and shall conclude on December 31 of the same year.
In the cases in which a company enters into liquidation or merger, its business fiscal year shall terminate in advance on the date on which it enters into liquidation or merger, and it shall be deemed that it shall have a fiscal year during all the time in which the company is in liquidation, the latter duly coinciding with that which is established in Article 11 of the Fiscal Code of the Federation.
ARTICLE 9.
Any company may increase or reduce its capital, provided it complies, as may
correspond to its character, with the requisites laid down in this Law.
Notice of reductions of capital of a company, whether by reimbursement to the associates or by relieving them from the obligation to meet uncalled capital shall be published three times, at ten- day intervals, in the Official Gazette of the State or Federal District or Territory where the company is domiciled.
Creditors of the company may oppose such reduction of capital by appearing, either separately or jointly, before the judicial authorities within a period commencing on the date the respective decision is taken by the company, and expiring five days after the publication of the last notice.
Such opposition shall be handled by summary proceedings, the reduction of capital being suspended until the company either pays the credits of the opposers, or duly secures same to the satisfaction of the judge who is dealing with the case, or until a sentence becomes operative to the effect that the opposition has no grounds.
ARTICLE 10.
(Amended by Decree of June 11, 1992) Mercantile companies shall be represented
by the person or persons entrusted with their administration, who shall be empowered
to transact all operations inherent to the object of the company, except as
expressly provided by law or by the articles of associations.
In order that the powers of representation which the company authorizes by means of the general meeting of shareholders or the board of directors should become effective, notarization of the part of the minutes in which the resolution relative to their authorization has been recorded shall be sufficient, being duly signed by whoever acted as president or secretary of the general meeting or of the board of directors, as the case may be, whoever must sign the notarial instrument, or in default thereof, the delegate especially appointed therefor, in substitution of the preceding persons, may sign it.
The notary shall record the trade or firm name of the company, its domicile, duration, amount of the capital stock and object thereof, as well as the faculties which, in accordance with the by-laws, correspond to the organ which accorded the authorization of the power of representation and, if applicable the designation of the members of the board of directors, in the corresponding instrument, by means of the report, insertion or addition to the appendix of the certifications, insofar as relevant, of the documents which are exhibited to him for the purpose.
If the company authorizes the power of representation through a person other than the aforementioned organs, in addition to the report or insertion indicated in the preceding paragraph, it must be accredited that said person has the faculties therefor.
ARTICLE 11.
Unless otherwise agreed, it shall be understood that all contributions to capital
which consist of property imply a transfer of ownership. The company shall not
assume the risks attending such property until it is actually delivered.
ARTICLE 12.
Notwithstanding any pact to the contrary, the associate whose contribution to
the capital consists of one or more credits shall be liable for their existence
and legality, as well as for the solvency of the debtor at the time of the contribution,
and should they consist of securities, he must guarantee that they have not
been the subject of publications, as provided by law in the event of loss of
such valuables.
ARTICLE 13.
New associates of a company which is already incorporated shall be liable for
all the obligations incurred prior to their admission, even though the name
or style of the company be changed. Any agreement to the contrary shall have
no effect to the prejudice of third parties.
ARTICLE 14.
The associate who withdraws or is expelled from a company shall remain liable
to third parties for unconcluded transactions at the time of his withdrawal
or exclusion.
No agreement to the contrary shall be effective to the prejudice of third parties.
ARTICLE 15.
Except in the case of companies with variable, the company may withhold that
part of its capital and profits which belong to the associates who withdraw
or are expelled or exclusion are concluded, when the amount due to them out
of the company's funds shall be computed and liquidated.
ARTICLE 16.
The following rules shall be observed for dividing profits or losses, unless
there by an agreement to the contrary:
1. Profits and losses shall be apportioned among the financing associates in proportion to their respective contributions to the capital of the company.
2. The working or active associates shall be entitled to one- half the profits; and should there be more than one such working associate, half the profits shall be equally divided among them.
3. No part of the losses shall be borne by the working associate or associates.
ARTICLE 17.
Any stipulations excluding one or more associates from participation in the
profits shall have no legal effect whatsoever.
ARTICLE 18.
Should there be a loss of capital of a company, such capital must be reinstated
or reduced before any distribution of profits can be made.
ARTICLE 19.
(Amended by Decree of January 23, 1981) Profits may only be distributed after
the financial statements issuing them have been approved by the assembly of
partners or shareholders. Neither may profits be distributed if the losses suffered
in one or more preceding fiscal years have not been restored or absorbed by
other parts of the capital, or if the capital stock has been reduced.
No stipulation to the contrary shall have any legal effect, and both the company and its creditors may claim redress from the persons who have received advances or profits distributed in violation of the provisions of this article, or demand their reimbursement from the administrators who have paid them, both the former and the latter being jointly liable for such advances or distributions.
ARTICLE 20.
A minimum of 5% must be set aside yearly from the net profits of all companies
to build up a reserve fund, until such fund amounts to one- fifty of its capital.
The reserve fund must be reinstated whenever it decreases for any reason whatsoever.
ARTICLE 21.
The decisions of the administrators or resolutions adopted at meeting of partners
or at general meetings which conflict with the provisions of the foregoing article
shall automatically be null and void. Should it become apparent at any time
that, notwithstanding this prohibition, the required portion of the profits
has not been set aside to build up or reinstate the reserve fund, the administrators
responsible therefor shall become jointly and to an unlimited extend bound to
hand over to the company a sum equivalent to that which should have been set
aside. (Amended by Decree of January 23, 1981)
The administrators shall, however, have the right to claim redress from the association for the sums thus made up by them, if the reserve fund has been distributed. The capitalization of the legal reserve shall not be understood as distributed, but in this case it must be refunded as from the fiscal year following that in which it was capitalized, in the terms of Article 20.
ARTICLE 22.
Any associate or creditor of the company may institute summary proceedings to
enforce the fulfillment of the obligation imposed on its administrators by the
preceding article.
ARTICLE 23.
(Amended by Decree of January 23, 1981) Private creditors of a partner cannot
during the life of the company enforce their rights except on the profits accruing
to said partner according to the corresponding financial statements, and, on
the company being dissolved, on the portion due to him under the liquidation.
They may also enforce their rights on any other reimbursement given to the partner,
such as return of premiums on shares, returns of additional contributions, and
other similar items.
They may however, attach the portion belonging to the partner in the liquidation, and, in stock companies, attach and sell the shares of the debtor.
When the stock is pledged as a guarantee of the proper conduct of administrators or Stockholders' Auditors, the effect of the attachment shall be that, when the time comes for the shares to be returned to them, such shares shall be placed at the disposal of the authority who made the attachment, together with any dividends accruing since the date of the notice of attachment.
ARTICLE 24.
Judicial decisions passed against a company condemning it to meet obligations
toward a third party shall have the full force and effect of a decision in judgment
against the associates if the suit was instituted against both them and the
company. Under such circumstances, the sentence shall first be executed on property
of the company, and only if there be no property or it be insufficient, shall
the sentence be executed on property of the associates against whom action was
entered.
Whenever the liability of the associates is limited to payment of their contributions to the capital, the sentence shall only be executed up to the eligible unpaid amount.
CHAPTER II. GENERAL PARTNERSHIPS
ARTICLE 25.
A general partnership is an association which trades under a business name and
in which all the partners are liable in a subsidiary, unlimited and joint manner
for business obligations.
ARTICLE 26.
Any clauses in the articles of partnership which abrogate the unlimited and
join liability of the partners shall have no legal effect whatsoever with regard
to third parties; but the partners themselves may stipulate that the liability
of one or more of them shall be limited to a given sum or quota.
ARTICLE 27.
The business name of the partnership shall consist of the name of one or more
of the partners, and where it does not contain the names of all of them the
words "and company" or others to the same effect shall be added.
ARTICLE 28.
Any person extraneous to the partnership who causes or allows his name to appear
as a part of the trading name of the firm shall be subject to the unlimited
and joint liability ordained in Article 25.
ARTICLE 29.
The admission or withdrawal of a partner shall not prevent the firm from continuing
to use the name formerly employed; however, should the name of the retired partner
appear in the name of the firm the word "Successors" must be added
thereto.
ARTICLE 30.
When the trading name of a company is the same as that formerly used by another
company whose rights and obligations have been taken over by the new company,
the word "Successors" must be added to the trading name.
ARTICLE 31.
Partners cannot transfer their rights in the company without the consent of
all the other partners, nor may new partners be admitted without the same requisite,
unless the articles of partnership stipulate that the consent of the majority
shall suffice in one or the other case.
ARTICLE 32.
The articles of partnership may specify that, in the event of the death of any
of the partners, the firm shall be continued with the heirs.
ARTICLE 33.
Should the transfer mentioned in Article 31 be authorized in favor of a person
who does not belong to the company, the partners shall have a preferential right
to acquire that interest for the same price, and shall have a term of fifteen
days wherein to exercise this right, such time limit being reckoned from the
date of the meeting at which the authorization was granted. Should more than
one partner desire to exercise this right, it shall pertain to all of them in
proportion to their contribution to the capital.
ARTICLE 34.
The articles of partnership can only be modified with the unanimous consent
of all the partners, unless it contains a provision to the effect that changes
can be approved by a majority. Under such circumstances the minority shall have
the right to withdraw from the partnership.
ARTICLE 35.
The partners may not engage in a similar business to that of the firm, either
on their own account or for any other party, nor may they join companies which
transact such operations without the consent of the other partners.
In the event of violation, the company may exclude the transgressor, deprive him of his rights in the company, and proceed against him for damages.
These rights shall become extinguished within a term of three months, reckoned from the date on which the company becomes aware of the transgression.
ARTICLE 36.
The administration of the partnership shall be entrusted to one or more administrators,
who may or may not be partners.
ARTICLE 37.
Unless otherwise agreed, the appointment and removal of administrators shall
be made freely and by a majority vote of the partners.
ARTICLE 38.
Any partner shall have the right to withdraw from the firm when, in opposition
to his vote, an outsider is appointed as administrator.
ARTICLE 39.
Where the administrator is a partner and the articles of partnership provide
that he cannot be removed, he may only be dismissed by decision pronounced by
a judge for fraud, guilt or inefficiency.
ARTICLE 40.
If no administrator is appointed, all the partners shall assist and concur in
the administration of the firm.
ARTICLE 41.
The administrator may only alienate and encumber the immovable property of the
firm with the consent of a majority of the partners or where such alienation
constitutes the objects of the company or is a natural consequence thereof.
ARTICLE 42.
The administrator may, subject to his accountability, grant powers- of- attorney
for transacting certain determined business for the firm, but a resolution,
adopted by a majority of the partners, shall be required to enable him to delegate
his post, the minority then having the right to withdraw if the party to whom
this post is delegated should be an outsider.
ARTICLE 43.
Accounts of the administration shall be rendered every six months if there be
no pact on the matter, or at any time agreed on by the partners.
ARTICLE 44.
All the administrators may sign for the firm, using the name of the partnership,
unless such authority be limited to one or more of them by the articles of partnership.
ARTICLE 45.
The decisions of the administrators shall be adopted by a majority of their
votes and, in the event of a tie, the partners shall cast the deciding vote.
In urgent cases when a failure to act might involve serious consequences for the firm, one administrator may take decisions all by himself in the absence of the other administrators who may be unable, even momentarily, to decide in regard to acts of administration.
ARTICLE 46.
The partners shall likewise make decisions by a majority of their votes. The
articles of partnership may, however, provide that majority be computed by interest
in the capital, but should the majority interest be presented by only one partner,
the additional vote of another partner shall be necessary.
For the purposes of this precept, the working or active partner shall only have one representation which, unless otherwise provided in the articles of partnership, shall be equal to that of the largest interest of any of the financing partners. Should there be several working or active partners, the sole representation granted to them by this article shall be exercised by casting as a vote the decision taken by a majority of the working partners.
ARTICLE 47.
The partners who take no part in the administration of the business may appoint
a supervisor to exercise vigilance over the administrators, and will be entitled
to inspect the administration and to examine the books of account and documents
of the company, making such claims as they may deem pertinent.
ARTICLE 48.
The capital shall not be distributed among the partners until after the company
is dissolved and wound up, except by an agreement to the contrary, and provided
such agreement implies no detriment to third parties.
ARTICLE 49.
The working or active parties shall, unless otherwise agreed, receive periodically
the amounts necessary for their sustenance, on the understanding that such amounts
and the dates same are payable shall be fixed by a majority of the partners
or, failing an agreement in regard thereto, by the judicial authorities.
The amounts which the working partners receive for sustenance shall be reckoned in the yearly balance sheets as against their profits, but such working partners shall have no obligation to refund them if the balance sheet shows no profits, or shows them to be smaller.
The financing partners, when entrusted with administrative duties, may receive, by agreement of a majority of the partners, a periodical remuneration, which will be charged to general expenses.
ARTICLE 50.
The articles of partnership may be rescinded with:
1. The use of the signature or capital of the firm for private business transactions.
2. The violation of the articles of partnership.
3. The violation of the legal provisions which govern the articles of partnership.
4. For acting in a fraudulent or deceitful manner against the company.
5. Due to his bankruptcy, interdiction or disqualification to engage in trade.
CHAPTER III. SPECIAL PARTNERSHIPS
(Partnerships en Commandite)
ARTICLE 51.
Special partnership (partnership en commandite) is that which exists under a
trading name and which is formed by one or more financed or active partners
who are liable in a subsidiary, unlimited and joint manner for all the business
obligations of the firm, and one or more financing or dormant partners whose
sole obligation consists in the payment of their respective contributions to
the capital.
ARTICLE 52.
The trading name of the firm shall consist of the name of one or more of the
financed partners, followed by the phrase "and company" or its equivalent
whenever the name of all of them do not appear. The trading name must always
be followed by the words "Societe en Commandite" or its abbreviation
"S. en C."
ARTICLE 53.
Any person, whether a financing partner in the firm or an outsider, who causes
or allows his name to appear in the name of the firm, shall be bound to the
liability of the financed partners. The same liability shall be incurred by
the financing partners when the phrase "Societe en Commandite" or
its abbreviations is omitted.
ARTICLE 54.
The financing partner or partners cannot undertake any part of the administration
of the business, or even act as attorneys in- fact of the administrators. However,
the authorizations and vigilance ordered or exercised by the financing or dormant
partners in the terms of the articles of partnership shall not be considered
as acts of administration.
ARTICLE 55.
The financing or dormant partner shall be jointly obligated toward third parties
for all the obligations of the firm in which he has intervened in violation
of the provisions of the preceding article. He shall likewise be jointly obligated
toward third parties even in respect of transactions in which he may have taken
no part, if he has customarily administered the affairs of the firm.
ARTICLE 56.
Should no provisions exist in the articles of partnership for the substitution
of the partner charges with the administration in the event of his death or
incapacity, and should the firm continue in business, it will be lawful for
one of the financing partners, if no finances or active partner is available
for the purpose, to temporarily transact urgent or purely administrative business
during a period of one month reckoned from the date in which the death of incapacity
occurred.
Under such circumstances, the financing partner shall only be responsible for his managerial duties.
ARTICLE 57.
The provisions of Articles 30 to 39 inclusive, 41 to 44 inclusive, and 46 to
50 inclusive, are applicable to special partnerships.
The provisions of Articles 26, ARTICLE 29. , ARTICLE 40. and 45 are only applicable to the financed or active partners.
CHAPTER IV. LIMITED LIABILITY COMPANIES
ARTICLE 58.
Limited liability companies are those formed by associates whose obligations
are limited to the payment of their contributions to the capital but in which
the capital shares cannot be represented by negotiable certificates, whether "order" or "bearer", and such contributions being transferable
only in the cases and with the requisites laid down in this law.
ARTICLE 59.
The trading name of limited liability companies shall consist of the names of
one or more associates, followed by the phrase "sociedad de Responsabilidad
Limitada! (Limited Liability Company) or its abbreviation "S. de R.L." (L.L.C.). Omission of this requisite shall render the associates liable in the
manner set forth in Article 215.
ARTICLE 60.
Any outsider who causes or allows his name to appear in the name of the company
shall be liable for its transactions up to an amount equal to the largest of
the contributions to capital.
ARTICLE 61.
(Amended by Decree of June 11, 1992) No limited liability company can consist
of more than 50 associates.
ARTICLE 62.
(Amended by Decree of June 11, 1992) The capital stock can never be less than
3,000,000 pesos; it shall be divided into shares which may be unequal as regards
value and category, but which must always represent 1,000 pesos or a multiple
of this amount.
COMMENT: The Third Transitory Article of the Decree of June 11, 1992 states that limited liability companies already existing on June 12, 1992 shall not be subject to the new minimum capital stock requirement. The old requirement was 5,000 pesos.
ARTICLE 63.
Limited Liability Companies cannot be formed nor may their capital be increased
by means of public subscription.
ARTICLE 64.
The capital of the company must be fully subscribed and at least 50% of each
interest must be paid up at the time of its incorporation.
ARTICLE 65.
(Amended by Decree of June 11, 1992) For the transfer of shares, as well as
for the admission of new associates, the consent of the associates representing
the majority of the capital stock shall be sufficient, except when the by-laws
provide for a larger majority.
COMMENT: The Second Transitory Article of the Decree of June 11, 1992 provides that limited liability companies formed before the effective date of the amendment (June 12, 1992), whose by-laws do not provide the proportion of votes required for the transfer of shares, shall have 12 months to make the pertinent statutory amendments, and if they do not do so within that time, that which is provided in this article, as amended, shall be applied.
ARTICLE 66.
Should the transfer referred to in the preceding article be authorized in favor
of an outsider, the associates shall have a preferential right to acquire that
interest for the same price and shall have a term of fifteen days wherein to
exercise this right, such time limit to be reckoned from the date of the meeting
at which such authorization was granted. Should more than one associate desire
to exercise this right, it shall pertain to them all in proportion to their
contribution to the capital.
ARTICLE 67.
The transfer of interests in the company by inheritance shall not require the
consent of the associates, unless an agreement exists providing, in the event
of death of one of the associates, for the dissolution of the company, or calling
for liquidation of the interest of the deceased partner, should the company
not continue with his heirs.
ARTICLE 68.
Each associate can only hold one interest in the capital, where a partner makes
a fresh contribution to the capital or takes over a part or the whole of the
interest of one of his co- associates, the value of his interest in the capital
shall be increased correspondingly, unless different rights attach to the interests
involved, in which case the separate character of the interests in the company
will be retained.
ARTICLE 69.
The shares of the company are not divisible. Nevertheless, the rights to division
and to partial transfer may be established in the articles of association, subject
to the rules set forth in Articles 61, ARTICLE 62. , ARTICLE 65. and 66 of this
Law.
ARTICLE 70.
When so provided for in the articles of association, the associates, in addition
to their general obligations, will also be obliged to make supplementary contributions
in proportion to those they originally made.
It is forbidden to provide in the articles of association that supplementary obligations must be complied with, consisting of work or personal services to be rendered by the associates.
ARTICLE 71.
The participations shall only be redeemable in the manner and measure set forth
in the articles of association in force at the time of the acquisition by the
associates of the participations involved. Such amortization shall be effected
with the net profits which, under the Law, are available for payment of dividends.
Should the articles of association contain precise stipulations to this effect,
certificates of "benefit" (equivalent to deferred shares) may be issued
to the associates whose participations have been redeemed. Such certificates
shall confer all the rights provided by Article 137 for the shares of "benefit".
ARTICLE 72.
Rules applicable to organization of the company shall likewise be observed when
any increases of capital are made.
The associates shall enjoy preference for subscribing any new participations issued in proportion to the participations owned by them, unless this privilege is abrogated by either the articles of association or the resolution adopted at the general meeting which decided to increase the capital.
ARTICLE 73.
The company shall keep a special register wherein shall be entrusted to one
or more managers, who may either be associates or not, and whose appointment
may either be for specified term for an indefinite period, unless otherwise
agreed.
When no appointment of managers has been made, the provisions of Article 40 shall apply.
ARTICLE 75.
Resolutions of the managers shall be taken by a majority vote, but should the
deed of constitution stipulate that they must act jointly, their unanimous agreement
shall be necessary, unless a majority consider that delay may entail serious
detriment to the company, in which case said majority may pass the respective
motion.
ARTICLE 76.
The administrators who had no knowledge of the decision or who voted against
it shall incur no liability.
Action to enforce the accountability of managers for recuperation of company funds and property shall pertain to the general meeting and to the associates individually, but the latter may not exercise such action of a general meeting absolves the managers of their liability by a vote representing three- fourths of the capital.
Creditors of the company are also entitled to action for accountability against the administrators, but such action may only be exercised by the receiver after the company has been declared in bankruptcy.
ARTICLE 77.
The general meeting of associates is the supreme authority of the company. Resolutions
shall be taken thereat by a majority vote of associates who represent at least
one- half of the capital, provided the deed of constitution does not call for
a larger majority. Unless there by a pact to the contrary, should the required
number not be present at the first meeting, the associates shall be summoned
to a second meeting, on which occasion, the resolutions shall be taken by a
majority vote of those present, whatever by the proportion of capital represented.
ARTICLE 78.
General meetings shall have power:
1. To discuss, approve, amend or reject the General Balance Sheet for the past business year, and to take whatever measures may be considered pertinent in this respect.
2. To proceed to the distribution of the profits.
3. To appoint and dismiss the managers.
4. The appointment of the Vigilance Committee, should there be one.
5. To decide regarding the division and amortization of interests in the capital.
6. To demand from the associates supplementary contributions and/or additional obligations, in the respective case.
7. To bring action for damages against the company executives or the associates, when entitled to do so.
8. To alter and amend the articles of association.
9. To agree to transfers of interests in capital and the admission of new associates.
10. To decide regarding increases or reductions of capital.
11. To decide on the dissolution of the company.
12. Such other powers as may pertain to it under the Law or the Articles of Association.
ARTICLE 79.
(Amended by Decree of June 11, 1992) Every associate shall have the right to
participate in decisions taken at general meetings, having one vote for each
1,000 pesos of his contribution to the capital or a multiple of this amount
as so determined, unless the articles of association provide otherwise in regard
to privileged interests in capital.
ARTICLE 80.
General meetings shall be held at the company's domicile at least once a year,
at the time stated in the Articles of Association.
ARTICLE 81.
General meetings shall be called by the managers; should they fail to do so,
by the Vigilance Committee; and lacking such a committee, so should it fail
to do so, the meeting shall be called by associates who represent more than
one- third of the capital.
Unless otherwise stated, notices of general meeting, containing the agenda shall be sent by registered post with return receipt requested, to each of the associates at least eight days in advance of the date set for the meeting.
ARTICLE 82.
The Articles of Association may specify the cases for which a general meeting
will not be required, and when it will suffice for the text of the resolutions
or decisions to be sent, by registered post with return receipt requested, to
the associates who shall vote in writing.
Should associates representing more than one- third of the capital so request, a general meeting must be called, even though the Articles of Association may only require a written vote by letter.
ARTICLE 83.
Unless otherwise agreed, amendments to the Articles of Association shall be
decided on by a majority vote of the associates who represent at least three-
fourths of the capital of the company, excepting for amendments implying changes
of the objects of the company or of the rules which govern the obligations of
associates, when a unanimous vote shall be required.
ARTICLE 84.
If so provided in the Articles of Association, a Vigilance Committee shall be
appointed, composed either of associates or of outsiders.
ARTICLE 85.
The Articles of Association may contain a stipulation to the effect that the
associates are entitled to receive interest on their contributions to capital
at a rate not exceeding 9% per annum, even though there be no profits; but only
during the period required to carry out such work as, depending on the object
of the company, should be preliminary to the actual start of operations, which
period may in no case exceed three years. Such interest payments shall be charged
to general expenses.
ARTICLE 86.
The provisions of ARTICLES 27, ARTICLE 29. , ARTICLE 30. , ARTICLE 38. , ARTICLE
42. , ARTICLE 43. , ARTICLE 44. , ARTICLE 48. and sections 1, 2, 3 and 4 of
ARTICLE 50 are applicable to limited liability companies.
CHAPTER V. JOINT STOCK COMPANIES
(CORPORATIONS)
ARTICLE 87.
A joint stock company (corporation) is that which operates under a company name
and is formed exclusively by stockholders whose liability is limited to paying
for their shares.
ARTICLE 88.
The names of the company may be chosen freely, but it must be different from
that of any other company and must in all cases be followed by the word "stock
company" (Sociedad Anonima) or its abbreviations "S.C." (S.A.).
PART I. CONSTITUTION OF THE COMPANY
ARTICLE 89.
(Amended by Decree of June 11, 1992) The constitution of stock companies shall
be subject to the following requisites:
I. There must be a minimum of two shareholders, each of whom must hold at least one share;
II. The capital stock shall not be less then 50,000,000 pesos, and must be fully subscribed;
COMMENT: The Third Transitory Article of the Decree of June 11, 1992 states that corporations already existing on June 12, 1992 shall not be subject to the new minimum capital stock requirement. The old requirement was 25,000 pesos.
III. At least 20% of the value of each share payable in money must be paid up in cash; and
IV. The value of each share payable partially or totally in specie must be fully paid up.
ARTICLE 90.
A stock company may be constituted either by the appearance before a Notary
Public of the persons subscribing the deed of incorporation, or by public subscription.
ARTICLE 91.
The deed of incorporation of a stock company must contain, in addition to the
data stipulated in Article 6, the following:
1. A statement of the paid- up portion of the share capital.
2. The number, par value and nature of the shares into which the share capital (stock) is divided, except as provided for in the second paragraph of section 4 of Article 125.
3. The terms and form in which the uncalled portion of the shares is to be paid.
4. The participation in profits granted to the founders.
5. The appointment of one or more stockholders auditors.
6. The powers of the general meeting and the requirements for the validity of its discussions as well as for the exercise of the right to vote; all insofar as legal provisions can be changed by the volition of the stockholders.
ARTICLE 92.
When a stock company is to be organized by public subscription, the founders
will draw up and deposit in the Public Register of Commerce a prospectus which
shall contain the proposed by- laws conforming to the requisites established
in Articles 6 and 91, except those required by section 1 and the first paragraphs
of section 4 of the former and section 5 of the latter.
ARTICLE 93.
Each subscription shall be made in duplicate on copies of the prospectus and
shall contain:
1. The name, nationality and domicile of the subscriber;
2. The number (written out) of shares subscribed for, and their nature and value;
3. The form and terms in which the subscriber undertakes to make the first payment on the shares subscribed;
4. When the shares are to be paid for in property other than cash, the particulars of such property;
5. The manner in which the statutory General Meeting shall be called and the rules under which it is to be conducted;
6. Date of the subscription; and
7. A declaration to the effect that the subscriber is conversant with the proposed by- laws and accepts them.
The founders shall keep one copy of the subscription, the other copy being given to the subscriber.
ARTICLE 94.
The subscribers shall pay into the banking institution which the founders will
designate, the amounts payable by them in cash in compliance with section 3
of the foregoing article, which sums can be withdrawn by the representatives
of the company, after it has been constituted.
ARTICLE 95.
Contributions in specie shall be formally effected when the minutes of the Statutory
Meeting of the company are recorded by a notary.
ARTICLE 96.
Should the subscriber fail to comply with the obligations imposed on him by
Articles 94 and 95, the founders may either legally demand compliance therewith,
or consider the shares not to have been subscribed.
ARTICLE 97.
All the shares must be subscribed within one year, reckoned from the date of
the prospectus, unless a shorter term is specified therein.
ARTICLE 98.
If the conventional or legal term mentioned in the preceding article should
expire without the share capital having been fully subscribed, or if through
any other cause the company is not constituted, the subscribers shall become
released of their obligations and shall be entitled to recover the sums they
had deposited.
ARTICLE 99.
The capital stock having been subscribed for and the installments stipulated
by law having been paid up, the founders shall, within a term of fifteen days,
publish the notice convening the statutory General Meeting in the manner provided
for in the prospectus.
ARTICLE 100.
The statutory General Meeting shall:
1. Verify the payment of the first instalment stipulated in proposed by-laws.
2. Examine and, if convenient, approve the appraisal of the property which one or more stockholders may have undertaken to contribute in specie. The subscribers shall not have the right to vote concerning their respective contributions in specie.
3. Discuss the participation in the profits which the founders might have reserved for themselves.
4. Appoint the administrators and controllers to hold office during the period specified in the by- laws and designate which of the former are to sign for the company.
ARTICLE 101.
Once the organization of the company has been approved by the Statutory Meeting,
the minutes of such meeting and the by- laws shall be notarized and registered.
ARTICLE 102.
Any operations effected by the founders of a stock company, except those necessary
for its constitution, shall be null and void, as regards the company, unless
approved by the General Meeting.
ARTICLE 103.
The following are the founders of a stock company:
1. The persons mentioned in Article 92; and
2. The parties to the deed of incorporation.
ARTICLE 104.
The founders cannot stipulate any benefit in their favor to the detriment of
the capital of the company, either at the time of its incorporation or at any
future date. Any agreement to the contrary shall be null and void.
ARTICLE 105.
The participation in the yearly profits granted to the founders shall never
exceed 10% thereof, nor shall it be payable over a period exceeding 10 years,
reckoned from the date of incorporation of the company. Such participation shall
not be payable until a 5% dividend has been paid to the stockholders on the
paid- up value of their shares.
ARTICLE 106.
Special bonds shall be issued to represent the participation referred to in
the preceding article, which are to be known as "Founder Bonds" and
which shall be governed by the provisions of the following articles.
ARTICLE 107.
The founder bonds shall not be computed as a part of the capital, nor shall
they entitle their holders to participate therein when the company is dissolved,
nor to take a part in its administration. Such bonds merely confer a right to
receive the participation specified in the bond, over the period of time therein
set forth.
ARTICLE 108.
(Amended by Decree of December 22, 1982, effective January 1, 1983) Founder
bonds shall contain:
1. The name, nationality and domicile of the founder.
2. The words "founder bond", clearly shown on each bond.
3. The trading name, domicile, term and capital of the company, and date of its incorporation.
4. The ordinal number of the bond and indication of the total number of bonds issued.
5. The participation in the profits to which each bonds is entitled, and the period over which it is payable.
6. the stipulations which by law should appear on all shares, concerning the nationality of any person acquiring the bond.
7. The manuscript signatures of the administrators who should sign these bonds in accordance with the by- laws.
ARTICLE 109.
the holders of founder bonds shall be entitled to exchange same for other bonds
representing different participations, provided that the total participation
under the new bonds be identical with that of the bonds surrendered.
ARTICLE 110.
The provisions of Articles 111, 124, 126 and 127 are applicable to founder bonds,
insofar as compatible with their character.
PART II. SHARES
ARTICLE 111.
The shares into which the capital of a stock company is divided will be represented
be registered (nominative) certificates which will serve the purpose of accrediting
and transferring the status and rights of the stockholder, and which shall be
governed by the provisions relative to documentary securities insofar as compatible
with their character and where not otherwise provided for by this Law.
ARTICLE 112.
All shares shall be equal in value and shall confer equal rights.
The deed of incorporation may, nevertheless, stipulate that the capital shall be represented by more than one kind of shares, each kind having special rights, but the provisions of Article 17 shall be observed in all cases.
ARTICLE 113.
Each share will confer the right to one vote, but it may be agreed in the deed
of incorporation that certain shares will only confer a vote of the extraordinary
General Meetings convened to deal with the matters enumerated in sections 1,
2, 4, 5, 6 and 7 of Article 182.
No dividends may be allotted for ordinary shares until a 5% dividend has been paid to the shares having a limited vote. If in a given year no dividends are paid, or such dividends be less than the aforesaid 5%, that percentage shall be made up in the subsequent years with the established preference.
Shares having a limited vote shall have a priority over ordinary shares at the dissolution of the company, for the reimbursement of capital.
The deed of incorporation may provide that a higher dividend shall be payable to shares having a limited vote as compared with that payable to the ordinary shares.
The holders of shares of limited vote shall enjoy all the rights granted by this Law to minorities in order to oppose any decisions taken at general meetings and to inspect the company's balance sheet and books.
ARTICLE 114.
When so provided for in the deed of incorporation, special shares may be issued
in favor or persons who are in the service of the company, which shall state
the requisites as to their form, value, inalienability and other special conditions.
ARTICLE 115.
Stock companies are forbidden to issue shares for less than their par value.
ARTICLE 116.
(Amended by Decree of December 21, 1984, published in Diario oficial of February
8, 1985) Only shares whose value is totally covered and those which have been
delivered to the shareholders in accordance with a decision of the extraordinary
general meeting, as a result of the capitalization of premiums on shares or
of other contributions provided by the shareholders, as well as the capitalization
of retained profits or of valuation reserves or revaluation reserves, shall
be liberated. In the case of capitalization of retained profits or of valuation
or revaluation reserves, such must have been previously considered in financial
statements duly approved by the shareholders' meeting.
In the case of valuation or revaluation reserves, such must be appraised by independent appraisers authorized by the National Commissions of Securities, credit institutions or public brokers.
ARTICLE 117.
(Amended by Decree of December 22, 1982, effective January 1, 1983) The profits
and the capital shall be distributed in proportion to the amount exhibited on
the shares.
The subscribers or purchasers of shares which are not fully paid up will remain liable for the uncalled amount of the shares during a term of 5 years reckoned from the date the transfer is recorded; but payment cannot be claimed from the seller before attachment has been made on the property of the purchaser.
ARTICLE 118.
When the shares state the dates of payment of installments and the amounts of
same, the company shall at the expiration of the terms, either proceed to demand
in court, by summary proceedings, the payment of the installments due, or else
to affect the sale of the shares.
ARTICLE 119.
When a payment of uncalled capital is ordered, the amount and date of which
are not set forth in the shares, advice of same shall be published at least
30 days in advance of the date set for the payment, in the Official Gazette
of the State Federal District or Territory where the company is domiciled. Should
the term expire and the payment not be made, the companies shall proceed in
accordance with the foregoing article.
ARTICLE 120.
The sale of shares referred to in the foregoing article shall be effected through
a licensed broker, new shares or new provisional certificates being issued to
replace the former ones.
The proceeds from the sale shall be applied to meet the payment called, and if in excess of the amount required therefore, the expenses incurred for the sale and the legal interest on the payment in arrears shall also be covered. The balance, if any, shall be paid over to the former shareholder, provided he claims same within a term of one year, reckoned from the date of the sale.
ARTICLE 121.
Should judicial proceedings not have been instituted within a period of one
month, reckoned from the date on which the payment should have been made, or
should it have been impossible, within the same period, to sell the stock for
a price sufficient to meet the payment called, the shares shall be declared
extinguished, and the capital shall be reduced accordingly.
ARTICLE 122.
Each share is divisible, and consequently, where a share is owned jointly by
several parties, they shall name a common representative. Should they fail to
agree on the nomination of such a representative, the appointment shall be made
by the judicial authorities.
The common representative cannot alienate nor encumber the share except in accordance with the provisions of civil law governing joint ownership.
ARTICLE 123.
The by-laws may stipulate that shares, during a period not exceeding 3 years,
reckoned from the date of the respective issue, shall be entitled to interest
at a rate not exceeding 9% per annum. In this case, the amount of such interest
shall be charged to general expenses.
ARTICLE 124.
The share certificates representing the shares must be issued be issued within
a term not exceeding 1 year, reckoned from the date of the deed of incorporation
or of the amendments thereto providing for an increase of capital.
Provisional certificates may be issued pending the delivery of the shares, which certificates may always be nominative and be exchanged for shares in due course.
The duplicates of the prospectus in which subscriptions have been made shall be exchanged for shares or provisional certificates within a term not exceeding 2 months reckoned from the date of the deed of incorporation. These duplicates shall serve as provisional certificates or definite shares in the cases mentioned by the Law.
ARTICLE 125.
(Amended by Decree of December 22, 1982. Effective January 1, 1983) Shares and
provisional certificates must contain:
1. Name, nationality and domicile of the shareholders.
2. Name, domicile and term of the company.
3. Date of incorporation of the company and particulars of its inscription in the Public Registry of Commerce.
4. Amount of the corporate capital, the total number and face value of the shares.
If the capital is made up of different or successive series of shares, mention of the amount of the corporate capital and number of shares shall be confined in each issue to the total which shall be balanced with each one of the series.
If the deed of incorporation so provides, the par value of the shares may be omitted, in which case the amount of the corporate capital shall also be omitted.
5. The amount which has been paid by the shareholder against value of the share, or a statement to the effect that the share is "liberated" (totally paid).
6. The series and the number of the share or provisional certificate, with expression of the total number of shares of that series.
7. Rights granted and obligations imposed on the shareholder and, should there be any, the existing limitations to the right to vote.
8. The manuscript signature of the administrators who should sign the shares according to the deed of incorporation, or a facsimile printed signature of such administrators, provided, in the latter case, that the original of the respective signatures is deposited at the Public Registry of Commerce where the company was registered.
ARTICLE 126.
Shares certificates or provisional certificates may represent one or more shares.
ARTICLE 127.
(Amended by Decree of Dec. 21, 1984, published in Diario Oficial of Feb. 8,
1985) Shares shall be provided with coupons, which shall be detached therefrom
and delivered to the company against payment of dividends or interest. Provisional
certificates may likewise be provided with coupons.
ARTICLE 128.
(Amended by Decree of December 22, 1982. Effective January 1, 1983) Stock companies
shall keep a register of shares containing the following data:
1. Name, nationality and address of the stockholder, indicating the number of shares held, with expression of their numbers, series, classes and other particulars.
2. Amounts paid up on the shares.
3. Transfers of stock effected in the manner laid down in Article 129.
4. Repealed by Decree of December 22, 1982.
ARTICLE 129.
The company shall consider as owners of the nominative shares, those whose names
appear recorded as such in the register referred to in the foregoing article.
To this end, the company must record in that register any transfers made, at
the request of any holder.
ARTICLE 130.
Amended by Decree of December 22, 1982. Effective January 1, 1983) the deed
of incorporation may contain an agreement to the effect that the transfers of
shares shall be subject to the authorization of the Board of Directors. The
Board may refuse its authorization and designate a purchaser for the shares
at their current market price.
ARTICLE 131.
(Amended by Decree of December 22, 1982. Effective January 1, 1983) Any transfer
of shares other than by endorsement must be recorded on the shares themselves.
ARTICLE 132.
Stockholders shall enjoy a preference to subscribe shares issued in the event
of an increase of capital, in proportion to the number of shares they hold.
This right must be exercised within a term of 15 days following the date of
publication in the Official Gazette of the company's domicile of the resolution
of the General Meeting to increase the corporate capital.
ARTICLE 133.
No new shares may be issued before all preceding ones have been fully paid up.
ARTICLE 134.
Joint stock companies are forbidden to acquire their own shares except by judicial
adjudication in payment of company credits.
In this event, the company shall sell the shares within a term of 3 months, reckoned from the date on which it may legally dispose of same, and should it fail to do so, within said period, the shares shall be extinguished and the capital shall be reduced accordingly. Such shares cannot be represented at general meetings of stockholders during the time they belong to the company.
ARTICLE 135.
When the capital stock is to be reduced by reimbursement to the stockholders,
the shares which are to be nullified shall be determined by a drawing held in
the presence of a Notary of licensed broker.
ARTICLE 136.
The following rules shall be observed for the redemption of shares by means
of distributable profits, if the deed of incorporation authorizes such amortization:
1. The redemption must be decided at the General Meeting of Stockholders.
2. Only fully paid up shares may be redeemed.
3. Shares to be redeemed shall be purchased through the Stock Exchange; but should the deed of incorporation or the resolution of the General Meeting stipulate that a fixed price be paid therefore, the shares to be redeemed shall be determined be a drawing held in the presence of a Notary or licensed broker. The results of the drawing shall be published once in the Official Gazette of the State, federal District or Territory where the company is domiciled.
4. Shares redeemed shall be nullified and "benefit"(1) shares may be issued instead when the deed of incorporation contains express stipulations to this effect.
5. The company shall keep at the disposal of the holders of the redeemed shares, for one year reckoned form the date of the publication referred to in section 3, both the purchase price of the shares drafted and the corresponding "benefit" shares, should such be issued. Should the holders of the redeemed shares fail to claim, within the stated term, the purchase price of the shares and the benefit shares, the price shall be applied to the company and the shares shall be annulled.
COMMENT: "Benefit" shares (acciones de goce), in Mexico, are certificates giving the rights enumerated in Article 137 to holders of the retired stock.
ARTICLE 137.
Benefit shares shall be entitled to whatever net profits are available after
the dividend specified in the deed of incorporation has been paid to the redeemable
shares. The deed of incorporation may likewise grant to the benefit shares the
right to vote.
In the event of liquidation of the company, the benefit shares shall concur equally with the unredeemed shares in the distribution of the corporate assets after the latter has been fully reimbursed, unless the deed of incorporation provides otherwise for the distribution of any surplus.
ARTICLE 138.
The members to the Board of Administration and the Directors who may have authorized
a purchase of shares in violation to the provisions of Article 134 shall be
personally and jointly liable for damages to the company or its creditors.
ARTICLE 139.
Under no circumstances may joint stock companies make loans or advances on their
own shares.
ARTICLE 140.
Except in the case provided for in the second paragraph of Part IV of Article
125, whenever, for any reason whatsoever, a change is made in the stipulation
appearing on the shares, these must be exchanged for others and the original
share certificates nullified, or it shall suffice that said change be put on
record on the shares by the certification of a Notary Public or licensed broker.
ARTICLE 141.
Shares paid for, either fully or partially, by means of contributions in specie,
must remain deposit with the company for 2 years. Should it become apparent,
during this period that the value of the property is 25% less than the value
for which it was contributed, the holder of the shares must pay the difference
to the company, and the latter shall have a preferential right over any other
creditor to the value of the shares deposited.
PART III. ADMINISTRATION OF THE COMPANY
ARTICLE 142.
The administration of a joint stock company shall be entrusted to one or more
directors, whose appointment shall be temporary and revocable, and who may either
be stockholders or not.
ARTICLE 143.
(Amended by Decree of June 11, 1992) When the directors are two or more they
will integrate a Board of Directors.
Unless otherwise agreed, the director first appointed shall act as Chairman of the Board, failing which, the next following in the order of appointment.
For the Board of Directors to function legally it will be necessary that at least one- half of its members be present, and its decisions shall be valid when taken by a majority of those present. The Chairman shall cast the deciding vote in case of a tie.
The by-laws may provide that resolutions made outside of a session of the board by unanimous consent of the members shall have, for all legal effects, the same validity as if they had been adopted in a board session, provided that they are confirmed in writing.
ARTICLE 144.
(Amended by Decree of Jan. 23, 1981) The deed of incorporation shall determine
the rights of the minority to designate directors, when there are three or more
directors, but in every case a minority representing 25% of the capital stock
shall appoint at least one Director. This percentage shall be 10% in the case
of companies which have registered their shares on the Securities Exchange.
The appointment of the director or directors designated by the minority shall only be revocable when the appointment of all the other directors is likewise revoked.
ARTICLE 145.
The General Meeting of Stockholders, the Board of Directors or the director
may appoint one or more general or special managers, who may or may not be stockholders.
The appointment of the managers shall be revocable at any time by the director,
Board of Directors or General Meeting of Stockholders.
ARTICLE 146.
The managers shall have the power expressly vested in them; they shall not require
special authorization of the directors or Board of Directors to act in their
capacity, and they shall enjoy, within the scope of their attributions, the
fullest powers of representative and of action.
ARTICLE 147.
The post of Director or Member of the Board and that of Manager are personal
and cannot be filled by means of a representative.
ARTICLE 148.
The Board of Directors may appoint, from among its members, a delegate to carry
out definite acts. Failing a special appointment, such representation shall
devolve upon the Chairman of the Board.
ARTICLE 149.
The Director or Board of Directors and the Managers may within their respective
scopes of action, grant powers- of- attorney in the name of the company, which
shall be revocable at any time.
ARTICLE 150.
The powers delegated and the powers- of- attorney granted by the Director of
Board of Directors and by the Managers shall not restrict their own powers.
The expiration of the term of office of the Director, the Board of Directors or the Managers shall not extinguish the powers delegated or the powers- of- attorney granted by them while in office.
ARTICLE 151.
Persons who, in accordance with the Law, are incapacitated to engage in trade
cannot be Directors or Managers.
ARTICLE 152.
(Amended by Decree of June 11, 1992) The by-laws of the general meeting of shareholders
may establish the obligation for the directors and managers to furnish a guarantee
to safeguard the liabilities which they may incur in the execution of their
mandates.
ARTICLE 153.
(Amended by Decree of June 11, 1992) The appointments of Directors and Managers
may not be recorded in the Public Registry of Commerce unless proof is exhibited
showing that they have furnished the guarantee referred to in the preceding
article, if the by-laws or general meeting of shareholders establishes that
obligation.
ARTICLE 154.
Directors shall continue to discharge their duties even after the expiration
of their term of office, until such time as new appointments are made and the
newly appointed Directors take up their duties.
ARTICLE 155.
The following rules shall be observed in the event of the appointment of Directors
being revoked:
1. Should there be several Directors and only the appointment of some of them is revoked, the remainder shall carry on the administration if they are sufficient in number to integrate the quorum required; and
2. If the appointment of the sole Director is revoked, or there being several Directors, the revocation applies to all of them or so many of them that the rest are insufficient to constitute the required quorum, the controllers shall appoint such provisional Directors as may be necessary.
The same rules shall apply when the lack of Directors is due to death, impediment or any other cause.
ARTICLE 156.
The Director whose interests conflict with those of the company in any business
transaction, must so declare to the other Directors and refrain from participating
in the corresponding deliberation and decision. The Director who violates this
provision shall be liable for the damages befalling the company as a result.
ARTICLE 157.
The Directors shall have the liabilities inherent to their office and those
derived from the obligations imposed in them by the law and the by- laws.
ARTICLE 158.
(Amended by Decree of Jan. 23, 1981) The Directors are jointly liable with the
company:
1. For the reality of the contributions made by stockholders.
2. For compliance with legal and statutory requirements with respect to dividends paid to stockholders.
3. For the existence and maintenance of the systems of accounting, control, recording, filing or reporting called for by law.
4. For the faithful execution of the resolutions of the General Meetings of Stockholders.
ARTICLE 159.
The Director who, being guiltless, has manifested his disagreement at the time
of the discussion and approval of any act, shall not be held liable therefor.
ARTICLE 160.
Directors will be jointly liable with their predecessors for any irregularities
which the latter may have incurred if, being aware of them, they fail to denounce
same in writing to the stockholders' auditors.
ARTICLE 161.
The liability of Directors can only be exacted by the decision of a General
Meeting of Stockholders, which shall designate the person who is to enforce
it, except as provided for in Article 163.
ARTICLE 162.
Directors once removed due to responsibilities incurred can only be appointed
again if the judicial authorities declare the action brought against them to
be inconsistent.
Directors shall cease in their office immediately upon the General Meeting of Stockholders passing a decision to exact the liability incurred by them.
ARTICLE 163.
Stockholders representing at least 33% of the capital stock may directly bring
action for civil liability against the Directors, provided the following requisites
are fulfilled:
1. That action is brought in favor of the company for the total liability incurred, and not only for the individual interest of the plaintiffs; and
2. That the claimants have not approved the resolution at the General Meeting of Stockholders to release the Directors sued from liability, is such a resolution has been taken.
Any property obtained as a result of the legal action taken shall belong to the company.
PART IV. VIGILANCE OVER THE COMPANY
ARTICLE 164.
Vigilance over a joint stock company shall be entrusted to one or more stockholders'
Auditors ("comisarios") whose appointment shall be temporary and revocable,
and who may either be stockholders or not.
ARTICLE 165.
(Amended by Decree of Jan. 23, 1981) None of the following may act as stockholders'
auditors:
1. Persons who are incapacitated by law to engage in trade.
2. Employees of the company, employees of companies in which they also own more than 25% of the capital stock, or employees of companies in which they also own more than 50% of the shares.
3. Direct blood relatives of the Directors without limitation of degree, collateral relatives, within the fourth degree, and relatives by affinity within the second degree.
ARTICLE 166.
(Amended by Decree of Jan. 23, 1981) Stockholders' auditors shall have the following
powers and duties:
1. To satisfy themselves that the guarantee specified in Article 152 is duly furnished and maintained, notifying the General Meeting of Stockholders, without delay of any irregularity.
2. To demand from the Directors a monthly report including at least a statement of the financial situation and a statement of results.
3. To carry out an inspection of the operations, documentation, records and other supporting evidence, to the extent necessary to make the audit of the operations which the law imposes and in order to render the report mentioned in the following paragraph.
4. To render annually to the Ordinary General Meeting of Shareholders a report respecting the veracity, sufficiency and rationality of the information presented by the Board of Directors to the same Shareholders' Meeting. This report must include, at least:
(a) The opinion of the auditor on whether the accounting policies and criteria and the information followed by the company are adequate and sufficient, taking into consideration the particular circumstances of the company.
(b) The opinion of the auditor on whether those policies and criteria have been applied consistently in the information presented by the directors.
(c) The opinion of the auditor on whether, as a consequence of the preceding letter b), the information presented by the directors reflects in true and sufficient manner the financial situation and the results of the company.
5. To have included in the agenda for meetings of the Board of Directors and of the General Meetings of Stockholders such points as they may deem pertinent.
6. To convene ordinary or extraordinary General Meetings of Stockholders when the Directors fail to do so, or whenever they may deem advisable to do so.
7. To attend all meetings of the Board of Directors, to which they shall be called, being entitled to express their opinions, but having no vote.
8. To attend General Meetings of Stockholders, being entitled to express their opinions, but having no vote; and
9. In general, to exercise at any time an unlimited supervision over the business of the company.
ARTICLE 167.
Any stockholder may denounce in writing to the stockholders' auditors any acts
of administration which he may consider irregular and the stockholders' auditors
must mention such denunciations in their report to the General Meeting of Stockholders,
making it regard thereto whatever observations or propositions they consider
pertinent.
ARTICLE 168.
Should for any reason, all the stockholders' auditors be absent, the Board of
Directors must call within three days a General Meeting of Stockholders which
will make the corresponding appointments.
Should the Board of Directors fail to issue the notice within the mentioned period, any one of the stockholders may apply to the judicial authorities of the domicile of the company, who shall call the meeting.
Should the General Meeting not be held or, if held, should no appointment be made, the judicial authorities of the domicile of the company shall, upon request of any one of the stockholders, appoint stockholders' auditors, who will hold office until the General Meeting of Stockholders makes definite appointments.
ARTICLE 169.
The stockholders' auditors shall be individually responsible to the company
in any given transaction, must refrain from interfering in any way in the business,
under penalty of incurring liability in the terms of Article 156.
ARTICLE 170.
The stockholders' auditors shall be individually responsible to the company
for the fulfillment of the obligations which the law and the by- laws impose
upon them.
ARTICLE 171.
The provisions of Article 144, 152, 154, 160, 161, 162 and 163 are applicable
to the stockholders' auditors.
PART V. THE FINANCIAL REPORTS
(Amended by Decree of Jan. 23, 1981)
ARTICLE 172.
(Amended by Decree of Jan. 23, 1981) It shall be the responsibility of the directors
of corporations (sociedades anonimas) to present a report annually to the shareholders'
meeting, which shall include at least the following:
1. A report of the directors on the progress of the company in the fiscal year, as well as on the policies followed by the directors and, as the case may be, on the principal projects existing.
2. A report in which the principal accounting policies and criteria and the information followed in the preparation of the financial information are declared and explained.
3. A statement showing the financial situation of the company at the closing date of the fiscal year.(2)
COMMENT: Please note that the expression: General Balance Sheet, has been eliminated from the Law. The third article of the Decree published in the Diario Oficial of Jan. 23, 1981 (effective date Jan. 1, 1981) states that any time the expression "Balance General" or any other equivalent expression is used in the mercantile laws as a document of financial information, it shall be understood that such expressions include the statements and notes established in (3) to (7) of Article 172 of the General Law of Mercantile Companies.
4. A statement showing the financial results of the company during the fiscal year, duly explained and classified.
5. A statement showing the changes in the financial situation during the fiscal year.
6. A statement that shows the changes in the elements making up the capital of the company, which took place during the fiscal year.
7. The notes necessary for completing or clarifying the information contained in the preceding statements.
The report of the auditors referred to in Part IV of Article 166 shall be added to the above information.
ARTICLE 173.
(Amended by Decree of Jan. 23, 1981) The report mentioned in the preceding article,
including the report of the auditors, must be drawn up and placed at the disposal
of the shareholders at least 15 days before the date of the meeting. The shareholders
shall have the right to receive a copy of the corresponding report.
ARTICLE 174.
Repealed by Decree of January 15, 1981.
ARTICLE 175.
Repealed by Decree of January 15, 1981.
ARTICLE 176.
(Amended by Decree of Jan. 23, 1981) Failure to present the report to which
Article 172 refers at the proper time shall constitute sufficient reason for
the General Meeting of Stockholders to pass a resolution for the dismissal of
the Director or Board of Directors or of the Stockholders' Auditors without
prejudice to enforcing any liability which they may have incurred.
ARTICLE 177.
(Amended by Decree of Jan. 23, 1981) Fifteen days after the date on which the
General Meeting of Stockholders approved the report to which Article 172 refers,
the financial statements included in the report must be published, along with
their notes and the report of the auditor, in the official periodical of the
entity in which the company is domiciled, or, in the case of companies which
have offices or subsidiaries in several entities, in the "Diario Oficial" of the Federation. A signed copy thereof also must be deposited in the Public
Registry of Commerce. Should there have been within this term any opposition
to its approval by the General Meeting of Stockholders, the publication and
deposit shall be made with a note of the number of shares represented by the
opposers and their names.
PART VI. MEETING OF STOCKHOLDERS
ARTICLE 178.
(Amended by Decree of June 11, 1992) The General Meeting of Stockholders is
the supreme representation of the company; it may decide and ratify all acts
and operations of the company and its resolutions shall be carried out by whomever
it designates for the purpose, or lacking any such designation, by the Director
or Board of Directors.
The by-laws may provide that resolutions made outside of a shareholders' meeting by unanimous consent of the shareholders representing all of the shares with voting rights or of the special category of shares in question, as the case may be, shall have, for all legal effects, the same validity as if they had been adopted by a general or special meeting of shareholders, respectively, provided that they are confirmed in writing. Insofar as the by-laws do not provide for such, the provisions of this law shall be applicable.
ARTICLE 179.
General Meeting of Stockholders shall be Ordinary or Extraordinary, but all
such meetings shall be held at the domicile of the company, without which requisite
they shall be null and void, except if due to a fortuitous case or force majeure.
ARTICLE 180.
Ordinary General Meetings are those held to deal with any matter other than
those specified in Article 182.
ARTICLE 181.
(Amended by Decree of Jan. 23, 1981) Ordinary General Meetings shall be held
at least once a year, within four months following the termination of the business
year, and in addition to deciding on the points included in the Agenda shall
also:
1. Discuss, approve or modify the report of the directors, to which Article 172 refers, taking into account the report of the Stockholders' Auditor, and take whatever steps it may deem suitable.
2. Appoint the Director or Board of Directors and Stockholders' Auditors in the respective cases.
3. Set the remuneration payable to the Directors and the Stockholders' Auditors when such remuneration is not fixed by the by- laws.
ARTICLE 182.
Extraordinary General Meetings are those held to deal with any of the following
subjects:
1. Extension of the duration of the company;
2. Premature dissolution of the company;
3. Increase or reduction of the capital of the company;
4. Changes in the objects of the company;
5. Change of nationality of the company;
6. Transformation of the company;
7. Merger with another company;
8. Issue of privileged stock;
9. Redemption by the company of its own stock and issue of benefit shares;
10. Issue of bonds;
11. Any other modifications to the deed of incorporation;
12. Such other matters as require a special quorum under the law or the deed of incorporation.
Extraordinary General Meetings may be held at any time.
ARTICLE 183.
General Meetings must be called by the Directors or the Board of Directors or
by the Stockholders' Auditors, except as provided in Articles 168, 184 and 185.
ARTICLE 184.
Shareholders representing not less than 33% of the corporate capital may request
from the Director or Board of Directors or the Stockholders' Auditors, in writing,
that a General Meeting of Stockholders be called to deal with the matters expressed
in their petition.
Should the Director or Board of Directors or the Stockholders' Auditors refuse to call the General Meeting, or fail to do so within a term of fifteen days reckoned from the date on which they receive the request, the meeting may be called by the judicial authorities of the domicile of the company at the request of shareholders representing 33% of the social capital, in proof whereof they must exhibit their share certificates.
ARTICLE 185.
The request to which the foregoing article refers may be made by the owner of
a single share in any of the following cases:
1. When no General Meeting has been held during two consecutive business years.
2. When the General Meeting held during the same term has not dealt with the subjects mentioned in Article 181.
Should the Director or Board of Directors or the Stockholders' Auditors refuse to call the General Meeting, or fail to do so with a term of fifteen days reckoned from the date on which they receive the request, the petition shall be entered before the competent Judge, who will issue the summons for the meeting after notifying the Director or Board of Directors and/or the Stockholders' Auditors of the request. The case shall be decided following the procedure established for incidental issues in mercantile suits.
ARTICLE 186.
(Amended by Decree of Jan. 23, 1981) General Meetings must be called by means
of a notice in the Official Gazette of the domicile of the company or in one
of the newspapers of widest circulation of said domicile published in advance
as provided for by the by- laws or, if there be no provisions therein to that
effect, fifteen days before the date set for the meeting. During this period
of time, the report to which Article 172 refers shall be held in the offices
of the company at the disposal of the stockholders.
ARTICLE 187.
Notices convening General Meetings shall contain the Order of the Day (agenda),
and shall be signed by the person who calls them.
ARTICLE 188.
Any resolution taken at a General Meeting in violation of the provisions of
the two following articles shall be null and void, unless the totality of the
shares be represented at the moment the vote is taken.
ARTICLE 189.
For an ordinary General Meeting to be legally held, at least one- half of the
social capital must be represented thereat, and resolutions adopted shall only
be valid when taken by a majority of votes.
ARTICLE 190.
Should it not be possible to hold a General Meeting on the date fixed, a second
call with the mention of this fact shall be made, and the meeting thus called
will decide on the matters appearing in the Agenda whatever be the number of
shares represented thereat.
At Extraordinary General Meetings the decisions shall always be taken by a favorable vote of the sufficient number of shares to represent at least one- half of the corporate capital.
ARTICLE 191.
Unless the deed of incorporation provides for higher proportions, at least three-fourths
of the corporate capital must be represented at Extraordinary General Meetings,
and resolutions shall be taken by a vote representing one- half of the corporate
capita.
ARTICLE 192.
Stockholders may be represented at general meetings by proxies, who may be shareholders
or not. Such a representation must be conferred in the manner required by the
by- laws or, there being no such provisions therein, in writing.
Neither the Directors nor the Stockholders' Auditors of the company may act as proxies.
ARTICLE 193.
Unless otherwise provided for in the by- laws, General Meetings of Stockholders
shall be presided over by the Director or Board of Directors, or, in their absence,
by whoever is designated by the stockholders present.
ARTICLE 194.
Minutes of General Meetings of Stockholders shall be written in the minute book
and shall be signed by the Chairman and the Secretary of the Meeting, and by
the Stockholders' Auditors who attend it. The documents proving that the calls
for the meeting were made in accordance with the procedure laid down in this
Law shall be attached to the minutes.
Wherever, for any reason, the minutes of a general meeting cannot be written in the respective minute book, they shall be recorded before a Notary.
Minutes of Extraordinary General Meetings shall be recorded before a Notary and inscribed in the Public Registry of Commerce.
ARTICLE 195.
Should there be various classes of stockholders, any proposition which might
injure the rights of one category must previously be accepted by the affected
class assembled in a special meeting, for which the majority necessary to make
amendments in the deed of constitution will be required, said majority to be
computed in respect of the total number of shares of that particular class.
Such special meetings shall be subject to the provisions of Article 179 and 183 and Articles 190 to 194, inclusive, and shall be presided over by the shareholder designated by those present.
ARTICLE 196.
Any shareholder who in a given business transaction has, for himself or for
others, interests that conflict with those of the company, must abstain from
taking part in any deliberation with regard thereto.
A shareholder who violates this provision shall be liable for damages when, without his vote, the majority necessary for the validity of the resolution would not have been attained.
ARTICLE 197.
(Amended by Decree of Jan. 23, 1981) Neither Directors nor Stockholders' Auditors
may vote concerning the approval of the reports to which Articles 166, (4) and
172 refer in general or in motions affecting their liability.
In case of violation of this ruling, the resolution adopted shall be null and void if the majority required would not have been attained without the vote of said Director or Stockholders' Auditors.
ARTICLE 198.
At the request of shareholders possessing 33% of the shares represented at a
General Meeting, the decision on any point on which they consider themselves
not to be sufficiently informed will be postponed for three days later, without
the need of new summons. This right can only be exercised once in connection
with the same matter.
ARTICLE 200.
Resolutions taken legally at General Meetings of Shareholders are binding even
on those dissident or absent, except with regard to the right of opposition
as provided for in this Law.
ARTICLE 201.
Shareholders representing 33% of the capital of the company may oppose in court
of law their solutions taken at General Meetings, provided the following requisites
are complied with:
1. That the suit is initiated within fifteen days following the date of which the meeting adjourned;
2. That the plaintiffs either did not attend the meeting or voted against the resolution taken; and
3. That the complaint specified the clause of the deed of incorporation or the legal precept violated and what they deem to be the essence of the violation.
No judicial opposition may be formulated against resolutions passed affecting the liability incurred by Directors or Stockholders' Auditors.
ARTICLE 202.
The execution of the opposed resolutions may be suspended by order of the judge,
provided the plaintiffs furnished a bond for an amount sufficient to meet any
losses and damages which might be caused to the company through non- compliance
with said resolutions, should the decision handed down declare the opposition
to be inconsistent.
ARTICLE 203.
The decision handed down in regard to the opposition shall affect all stockholders.
ARTICLE 204.
All suits of opposition against the same resolution shall be decided by a single
decision.
ARTICLE 205.
In order to exercise the judicial actions referred to in Article 185 and 201,
the stockholders must deposit their shares with a Notary or a credit institution,
who will issue the certificate which is to be attached to the complaint and
such other certificates as may be requested to enforce their rights as shareholders.
Shares so deposited shall not be returned until the suit is terminated.
ARTICLE 206.
Whenever a General Meeting of Stockholders adopts resolutions in regard to the
matters specified in sections 4, 5 and 6 of Article 182, any shareholder who
has voted in contra shall have the right to withdraw from the company and to
be reimbursed for his shares on proportion to the assets of the company as shown
on the last balance sheet, provided he makes a request to this effect within
fifteen days following the date on which the meeting adjourns.
CHAPTER VI. SPECIAL PARTNERSHIP WITH SHARES
ARTICLE 207.
Special partnerships with shares shall be composed of one or more financed (working)
partners who are liable in a subsidiary, unlimited and joint manner for obligations
incurred by the partnership, and one or more financing partners whose liability
is limited to payment of their shares.
ARTICLE 208.
Special partnerships with shares shall be governed by the rules referring to
joint stock companies, except as provided in the following articles.
ARTICLE 209.
(Amended by Decree of December 22, 1982. Effective January 1, 1983) The capital
stock shall be divided into shares, and may not be transferred without the consent
of all the working partners and that of two- thirds of the financing partners.
ARTICLE 210.
Special partnerships with shares may transact business under a trading name
formed with the name of one or more of the financed partners, followed by the
phrase "and Company" or its equivalent if the names of all such partners
do not appear. This trading name, or the denomination as the case may be, shall
be followed by the words "Sociedad en Comandita por Acciones" (Special
Partnerships with Shares) or its abbreviation, "S. en C. por A.".
ARTICLE 211.
The provisions of Articles 28- 30, and 53- 55 are applicable to Special Partnerships
with Shares; and insofar only as the financed (working partners) are concerned,
the provisions of Articles 26, ARTICLE 32. , ARTICLE 35. , ARTICLE 39. and 50
shall also apply.
CHAPTER VII. COOPERATIVE SOCIETIES
ARTICLE 212.
Cooperative societies shall be governed by their special legislation.
CHAPTER VIII. COMPANIES HAVING VARIABLE CAPITAL
ARTICLE 213.
In companies having variable capital, the capital may be increased by subsequent
contribution of the associates or by the admission of new associates, or diminished
by the partial or total withdrawal of contributions, without further formalities
than those set forth in this Chapter.
ARTICLE 214.
Companies with variable capital shall be governed by the same provisions as
the corresponding kind of company or partnership; and insofar as balance sheets
and liability companies, except as provided in this chapter.
ARTICLE 215.
The name of the company or partnership must in all cases be followed by the
phrase "with variable capital".
ARTICLE 216.
The deed of constitution of any company or partnership with variable capital
must specify the conditions which govern increases or decreases of capital,
in addition to the stipulations required for that particular kind of company
or partnership.
For joint stock companies or special partnerships with shares, the share issues shall be governed by stipulations in the deed of incorporation, or articles of partnership or by resolution passed at an Extraordinary General Meeting. Shares issued but not subscribed or the provisional certificates, as the case may be, shall be held at the company for delivery when such shares are subscribed.
ARTICLE 217.
For joint stock companies, limited liability companies and special partnerships
with shares, the minimum capital can never be less that that specified in Articles
62 and 89. For ordinary partnerships and financed partnerships, the minimum
capital may never be less than one- fifth of the initial capital.
All stock companies are forbidden to advertise the amount of authorized increases to capital without stating their minimum capital. Administrators or any other functionaries of the company who violate this ruling shall be liable for any losses or damages thereby incurred.
ARTICLE 218.
Repealed by Decree of December 22, 1982. Effective January 1, 1983.
ARTICLE 219.
All increases or decreases of capital must be recorded in the special register
book kept by the company for this purpose.
ARTICLE 220.
All stockholders must notify the company of the partial or total withdrawal
of their contributions in a manner which will bear proof. If such notification
is made at any time prior to the last quarter of such business year, it shall
take effect at the end of that year, but if made later it shall not take effect
until the end of the following business year.
ARTICLE 221.
The right to withdrawal may not be exercised if the capital is thereby reduced
to less than the minimum allowed.
CHAPTER IX. MERGER, TRANSFORMATION AND SPIN-OFF
OF COMPANIES
(Amended by Decree of June 11, 1992)
ARTICLE 222.
The merger of companies must be decided by each of them in the manner and terms
befitting of their own character.
ARTICLE 223.
Resolutions to merge shall be recorded in the Public Register of Commerce and
published in the Official Gazette of the domicile of the companies which are
to merge. Each company must publish its last balance sheet and such company
or companies as are to disappear will also publish the procedure adopted for
extinguishing their liabilities.
ARTICLE 224.
The merger cannot be realized until three months after the registration referred
to in the preceding article.
During this lapse of time any creditor of the merging companies may start summary proceedings to oppose the merger, which shall be suspended until such time as a sentence declaring the opposition to be inadmissible has become operative.
The aforementioned period of time having elapsed without opposition being entered, the merger may become effective and the subsisting company or that created as a result of the merger shall take over all the rights and obligations of the companies which disappear.
ARTICLE 225.
The merger shall take effect immediately upon its being recorded if it is stipulated
that all liabilities of the merging companies be met, or if an amount sufficient
to cover such debts is deposited in a credit institution, or if the cons