Understanding Business Concepts and Corporate Structure

Business Concept and Economic Sectors

The business concept defines a company as all human activities organized for the purpose of producing goods or providing services.

Economic Activity Sectors

• Primary: Includes resources related to agriculture, fisheries, forestry, etc.
• Secondary: Production/Manufacturing output.
• Tertiary: Includes transportation, commerce, and other services.

Elements of the Company

To provide goods or services, a company requires several elements, such as land, buildings, machinery, transportation, and technology. In an enterprise, resources are used or consumed based on three classic factors:

1. Nature (passive role; requires human collaboration).
2. Work/Labor (organization; active collaboration between man and nature).
3. Capital (which has been produced and is intended for consumption, not production).

Requirements for Constitution of an SA (Sociedad Anónima)

An SA must be established by public deed and registered in the Commercial Register.

Charter of SA Content

The charter must include:

1. Denomination of Society: (Free choice; typically includes the figure "SA").
2. The Object: The activity to which the society will be devoted.
3. Duration: The set time; in practice, this often becomes indefinite.
4. The Capital.
5. Start Date of Operations: Coincides with the awarding of the deeds.
6. The Registered Office.
7. Organ of Administration and Representation.
8. Deadlines and Arrangements for Convening Shareholders Meetings.
9. Date of End of the Fiscal Year.

Bodies of the SA

a) General Meeting of Shareholders

This is where shareholders, duly convened, decide by majority vote on matters within their competence, such as censure, social management, approval of accounts for the previous year, and deciding on the application of the result. The ordinary meeting must meet within the first six months of each year.

b) The Administrators

• Appointment: Made by the General Meeting. Specific naming attributes are not needed unless the bylaws state otherwise.
• Effectiveness: The appointment takes effect from its acceptance.
• Registration: Must be submitted for registration in the Commercial Register within 10 days afterward.
• Tenure: Administrators hold office with the diligence of a businessman and a loyal representative.

c) Auditors

Annual accounts and reports shall be reviewed by the auditors. The appointment of auditors cannot be for a term less than 3 years and not more than 9 years. The auditors shall report on the outcome of their performance within one month after the accounts have been handed over.

General Shareholders Meeting Notice Requirements

The General Meeting must be convened by notice published in the bulletin of the Register and in one of the largest newspapers in the province, at least 15 days before the date of celebration. The notice must state the date of the meeting's first call and the issues to be addressed (the agenda).