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The Ley General de Sociedades Mercantiles (Corporate Law) recognizes as business entities the general partnership (sociedad de nombre colectivo), the limited liability partnership (sociedad en comandita simple), the limited liability company (sociedad de responsabilidad limitada), the stock corporation (sociedad anónima), the limited liability stock partnership (sociedad en comandita por acciones), and the cooperative (sociedad cooperativa). The LGSM regulates the operations of the above-mentioned companies, except for the cooperative which, due to its nature, is governed by a special law.
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The above-mentioned companies are considered Mexican, since they are incorporated in Mexico under Mexican law, regardless of the nationality of their partners or shareholders or the source of their capital. It is important to note that the LGSM allows general partnerships, limited liability partnerships, limited liability companies, stock corporations, and limited liability stock partnerships to be formed as variable capital companies. As such they have a fixed minimum capital that cannot be less than the legal minimum and a variable capital that can be increased by subsequent contributions of the partners/shareholders or by the admission of new partners/shareholders and decreased as the result of a partial or total withdrawal of contributions with a minimum of formalities.
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The business entities regulated by the LGSM can be divided into two large groups: partnerships and stock companies. In partnerships, the personal characteristics of the partners are taken into account and, therefore, the inclusion or exclusion of partners, or the exercise of the right of withdrawal of a partner, are treated or regulated in a special manner. Furthermore, these types of companies are intuitu personae and the number of partners is limited. Partnerships recognized or regulated by the LGSM are the general partnership, the limited liability partnership, the limited liability stock partnership, and the cooperative. Stock companies are those for which investment of large sums of capital is required and therefore, regardless of the personal characteristics of the shareholders, they are invited to invest in the business through the contribution of capital.
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The stock company par excellence regulated by the LGSM is the stock corporation (sociedad anónima). Above we have referred to partnerships and stock companies and we have specified five of the six types of companies that the LGSM regulates, deliberately excluding reference to the limited liability company (sociedad de responsabilidad limitada), is neither a pure partnership nor a pure stock corporation, but rather mixed, its existence and regulation having characteristics of both types of companies: intuitu personae elements of the partners and elements of stock companies.
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The types of business entities most common in Mexican law are, based on the number of companies formed, first, the stock corporations, and next the limited liability companies. This is due to the fact that both the shareholders in a stock corporation and the partners in a limited liability company have limited liability before the company and third parties. The liability of the partners or shareholders in either a limited liability company or a stock corporation is limited to the amount of the contributions made by the partners or shareholders to the capital of the company, while the liability of the partnersin partnerships is unlimited, joint and secondary, and therefore the assets of the partners could be affected.
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Given that the limited liability company and the stock corporation are the types of business entities most common in Mexico, further on we will make special mention of their operations and characteristics.
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Information by Von Wobeser & Sierra, S.C. |
