Commercial Companies: Formation, Types, and Operation

Commercial Companies

Commercial Company:
A union of two or more people, according to one of the types specified in Law 19,550, in an organized manner. The parties agree to make contributions, either for the production of goods or services, and share the resulting gains or losses.

Nature

• Existence of Two or More People: A commercial company is distinct from a one-person business.
• Reciprocal Benefits: Each partner is committed to making contributions.
• Typical: Its constitution must fall into one of the types legislated in an organized society.
• Production or Exchange of Goods or Services: Always for-profit.
• Participation in Gains and Losses: The corporation can have earnings or losses that members must endure.

Constitution

Contract

• Private Instrument: Among the partners.
• Public Instrument: Before a Notary Public.

The company must be registered in the PRC (Public Registry of Commerce) after agreement among future partners.

Contract Requirements

• Data from partners.
• Information about the company.
• Purpose of the company.
• The contribution of each partner (capital).
• The period of duration.
• Organization of administration, supervision, and membership meetings.
• Rules for distributing gains and losses.
• Clauses.

Unincorporated Companies (Irregular)

These are subject to provisions concerning unincorporated companies (do not conform to legal standards). The partners have unlimited joint and several liability.

Who Can Be Partners

• Spouses can form corporations.
• Corporations and joint-stock limited partnerships.
• Any company, except financial institutions, may participate in another company.

Classification of Companies

• Contracted Company: One that has dominant influence and equity participation.
• Related Company: One that has more than 10% of the capital of another.

Types of Partners

• Apparent Partner: Lends their name as a partner.
• Hidden Partner: Their name is replaced by the apparent partner.
• Member of a Member: A person who gave a partner participation.

Relationship of Partners with the Company

This relationship of rights and obligations begins when the contract is signed.

Merger

When two or more companies are dissolved without liquidation to form a new one.

Dissolution

End of the Company

• By decision of the partners.
• By the end of the term.
• By loss of capital.
• By bankruptcy.
• By merger or absorption.
• By reducing the number of members to one.
• By sanction.

Liquidation

This involves selling property, collecting credits, and paying debts. An inventory and balance sheet are performed.